Share this @internewscast.com
CHINA – 2022/04/25: In this photo illustration, an AT&T logo seen displayed on a smartphone. (Photo … [+]
SOPA Images/LightRocket via Getty Images
AT&T stock (NYSE: T), which currently trades at $21 per share looks like a good investment opportunity at the moment. The stock remains up by around 12% year-to-date, considerably outperforming the broader S&P 500, which remains down by about 18% over the same period. In fact, the total returns would be stronger if we account for the Discovery common stock that shareholders received following the spin-off of AT&T’s
T
Now, there are some concerns as well. AT&T’s net debt stood at almost $170 billion at the end of March 2022, just prior to the spin-off of WarnerMedia. Even after accounting for approximately $40 billion in cash the company received following the WarnerMedia transaction, AT&T’s long-term debt would stand at over 3x its projected 2022 EBITDA. Moreover, with interest rates also on the rise, AT&T could face some pressure if it seeks to refinance debt. However, AT&T is looking to improve its leverage ratios, via cost reductions targeting 2.5x net debt to EBITDA by the end of 2023.
However, we remain bullish on AT&T stock. At current levels of around $21 per share, AT&T stock trades at just about 8x projected 2022 earnings, which is reasonable, considering the steady growth and margin improvement prospects for its core wireless business. We value AT&T stock at about $28 per share, which is roughly 35% ahead of the current market price.
See our analysis on AT&T Valuation: Expensive or Cheap for more details on what’s driving our valuation for the company. Also see our analysis on AT&T Revenue: How Does AT&T Make Money, for more details on the company’s key revenue streams and how they have been trending.
With stock prices falling precipitously across sectors, we seem to be heading toward a bear market for the first time since March 2020 when the Covid-19 outbreak triggered a market crash. We capture key trends in the Dow during and after major market crashes in our interactive dashboard analysis, ‘Market Crashes Compared’.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
T Return
Trefis
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates