Should T Stock Be Part of Your Portfolio Post Robust Q4 Earnings?

Core Insights - AT&T Inc. reported strong fourth-quarter 2025 results, with adjusted earnings and revenues exceeding Zacks Consensus Estimates due to healthy mobility and broadband demand trends [2] - The company experienced solid wireless traction and customer additions, although this was partially offset by declining demand for legacy voice and data services [2] - AT&T aims to continue investing in 5G and fiber to drive long-term growth [2] Fiber Convergence - AT&T is benefiting from increased fiber convergence, with the fiber convergence rate rising 200 basis points year-over-year to 42% [3] - The company recorded net fiber additions of 283,000 and 221,000 subscribers for Internet Air during the fourth quarter [3] - By 2030, AT&T plans to reach approximately 50 million customer locations with its in-region fiber network [3] Business Model and Strategy - AT&T's customer-centric business model focuses on mid-band spectrum deployment and fiber densification [4] - The company plans to restructure its operating segments in Q1 2026 to better reflect its evolving business model [5] - New segments will include Advanced Connectivity, Legacy, and Latin America [5] Financial Outlook - AT&T expects to drive accelerated growth in adjusted EBITDA and double-digit adjusted EPS growth from 2026 to 2028 [6] - The company plans to return over $45 billion to shareholders through dividends and share repurchases [6] - AT&T achieved over $1 billion in cost savings in 2025 and anticipates an additional $4 billion in annual savings by 2028 [6] Capital Projects and Cash Flow - Major capital projects are expected to be completed by the end of 2030, which will enhance long-term cash flow [7] - Improved growth and declining capital intensity are likely to provide greater flexibility for shareholder returns [7] Market Performance - AT&T's stock has gained 8.4% over the past year, outperforming the industry decline of 4.4% [10] - The company has outperformed T-Mobile but lagged behind Verizon in stock performance [10] Challenges - Despite strong wireless traction, AT&T faces a decline in legacy services, with persistent losses in access lines due to competitive pressures [12] - The wireline division is struggling with contracting high-speed Internet revenues and margin pressures [12] Estimate Revisions - Earnings estimates for AT&T for 2026 have increased by 0.9% to $2.28, and for 2027, they have risen by 0.8% to $2.54, indicating bullish sentiment [13] Long-term Positioning - AT&T is well-positioned to bridge the digital divide and enhance connectivity through steady infrastructure investment and new technologies [15] - The uptrend in estimate revisions reflects optimism about the stock's growth potential [15]