AT&T shares fell by -1.9% during the day's morning session, and are now trading at a price of $17.18. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
AT&T Has Attractive P/B and P/E Ratios:
AT&T Inc. provides telecommunications and technology services worldwide. The company belongs to the Telecommunications sector, which has an average price to earnings (P/E) ratio of 23.78 and an average price to book (P/B) ratio of 3.46. In contrast, AT&T has a trailing 12 month P/E ratio of 9.2 and a P/B ratio of 1.18.
AT&T's PEG ratio is 6.47, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $170,756 | $181,193 | $143,050 | $134,038 | $120,741 | $122,428 |
| Operating Margins | 15% | 15% | 6% | 19% | -4% | 19% |
| Net Margins | 11% | 8% | -4% | 15% | -7% | 12% |
| Net Income (M) | $19,370 | $13,903 | -$5,176 | $20,081 | -$8,524 | $14,400 |
| Net Interest Expense (M) | $7,957 | $8,422 | $7,727 | $6,716 | $6,108 | $6,704 |
| Depreciation & Amort. (M) | $28,430 | $28,217 | $22,523 | $17,852 | $18,021 | $18,777 |
| Diluted Shares (M) | 6,806 | 7,348 | 7,466 | 7,503 | 7,587 | 7,258 |
| Earnings Per Share | $2.85 | $1.89 | -$0.75 | $2.73 | -$1.13 | $1.97 |
| EPS Growth | n/a | -33.68% | -139.68% | 464.0% | -141.39% | 274.34% |
| Avg. Price | $17.99 | $19.55 | $18.98 | $18.35 | $17.72 | $17.1899 |
| P/E Ratio | 6.31 | 10.29 | -25.31 | 6.62 | -15.68 | 8.73 |
| Free Cash Flow (M) | $22,351 | $29,033 | $28,440 | $26,412 | $16,186 | $20,461 |
| CAPEX (M) | $21,251 | $19,635 | $14,690 | $15,545 | $19,626 | $17,853 |
| EV / EBITDA | 5.17 | 5.27 | 9.24 | 6.57 | 19.26 | 5.99 |
| Total Debt (M) | $176,505 | $163,147 | $157,245 | $175,631 | $135,890 | $137,331 |
| Net Debt / EBITDA | 3.14 | 2.73 | 4.83 | 3.58 | 9.84 | 3.09 |
| Current Ratio | 0.8 | 0.79 | 0.82 | 1.61 | 0.59 | 0.71 |
AT&T has declining revenues and a flat capital expenditure trend, declining EPS growth, and not enough current assets to cover current liabilities because its current ratio is 0.71. On the other hand, the company has decent operating margins with a stable trend working in its favor. Furthermore, AT&T has positive cash flows and significant leverage levels.
