T Stock: AT&T Earnings, Key Free Cash Flow Estimates for the Full Year

AT&T (T)early Wednesday reported fourth-quarter earnings that beat estimates while revenue was just below Wall Street targets. T stock surged, moving into a buy zone, as full-year free cash flow was slightly influenced by the company’s own outlook.


Reported before market open, AT&T’s earnings excluded WarnerMedia, spun off in early April 2022. The telecom giant said fourth-quarter adjusted profit from continuing operations was 61 cents, up 9% from the previous year. Revenue from continuing operations increased 0.8% to $31.3 billion.

Analysts had forecast AT&T earnings of 57 cents a share on revenue of $31.4 billion, according to FactSet. A year earlier, AT&T earned 56 cents a share on revenue of $40.96 billion, but that included sales from discontinued operations.

Share T: free cash flow outlook for 2023

Additionally, AT&T reported full-year free cash flow of $14.1 billion, beating analyst estimates of $13.78 billion. AT&T had forecast $14 billion in free cash flow. In the fourth quarter, AT&T generated $6.1 billion in free cash flow, beating estimates of $5.37 billion.

For fiscal 2023, AT&T forecast free cash flow of $16 billion versus Wall Street estimates of $16.2 billion. Free cash flow growth supports AT&T’s dividend.

“We view AT&T’s reasonably conservative FCF 2023 guidance of $16 billion, including $24 billion in capital expenditures, as the key takeaway for the print,” Well Fargo analyst Eric Luebchow said in a report.

He added, “With a ‘$16 billion or better’ outlook, AT&T has released a guidance that we believe is conservative enough – with upside potential – that includes EBITDA growth. Capital expenditures should moderating in 2024 and beyond. Crucially, this implies the dividend payout ratio is slightly above 50%, which provides great financial flexibility.”

The telecommunications company said it expects adjusted earnings of $2.40 per share for 2023 amid its outlook. This includes a negative impact of 25 cents from rising interest rates and taxes. Additionally, T-share analysts had forecast earnings of $2.56 per share for 2023 on revenue of $122.8 billion.

AT&T did not provide a revenue forecast for 2023.

Trading today, T shares jumped 6.3% to 20.36 in morning trading. Stocks hold an entry point of 19.62.

Top Postpaid Phone Subscriber Views

Additionally, the company said it added 656,000 wireless postpaid phone customers in the quarter compared to estimates of a gain of 645,000.

But AT&T added 280,000 fiber-optic broadband subscribers, missing analysts’ sights for 330,000.

T stock had gained 4% so far this year before the earnings report. Heading into AT&T’s earnings report, the stock had a relative strength rating of 62 out of the best possible 99, according to IBD Stock Checkup.

WarnerMedia split off and merged with Discovery in early April 2022. The new media company is called Discovery of Warner Bros. (WBD). WBD stock has gained 40% in 2022.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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