AT&T (T) on Thursday reported September quarter earnings and revenue that beat estimates and said it added more postpaid wireless subscribers than expected. AT&T stock jumped on the news.
When reporting before the market opened, it excluded earnings from AT&T WarnerMedia, which sprang up in early April, and DirecTV. The telecom giant said third-quarter adjusted profit from continuing operations was 68 cents, up 3% from a year earlier. Revenue from continuing operations decreased 4.1% to $30 billion.
Analysts expected AT&T earnings of 61 cents per share on revenue of $29.8 billion, according to FactSet. A year ago, AT&T earned 66 cents a share of $39.9 billion in revenue, but that included sales from discontinued operations.
T Stock: Faster EBITDA Growth
“Earnings per share was driven by higher EBITDA ($10.7 billion), with T reporting that it outperformed EBITDA (earnings before interest, tax, depreciation and amortization) in all of its major segments,” Goldman Sachs analyst Brett Feldman said in a report. “. AT&T now expects adjusted EPS from continuing operations for the full year to be $2.50 or higher versus prior guidance from $2.42 to $2.46.
In addition, AT&T reported free cash flow of $3.8 billion, which is below the consensus estimate of $4.4 billion. But AT&T has reiterated its free cash flow guidance for 2022 in the range
14 billion dollars. That’s less than the original $20 billion guidance, Craig Moffett, an analyst at MoffettNathanson, noted in a report.
“AT&T should show a clear path to shrink its balance sheet,” Moffett said in a report. “Debt reduction requires faster debt retirement or faster EBITDA growth. Yes, EBITDA growth improved — and that was just one of a number of improvements in today’s (third quarter) earnings release — but debt reduction It’s still slower than one might like.”
Moffett added, “All of this goes a long way toward explaining why AT&T is looking for funding partners to help fund the construction of wired fiber to consumers. AT&T has made building fiber an essential part of its strategy. But the required capital expenditure is huge, and payback periods are frighteningly long.”
AT&T stock jumped 8.8% to close to 16.90 in morning trading in the stock market today.
AT&T Stock: Wireless Subscriber Adds Beat
The company also said it had added 708,000 postpaid wireless phone customers against an estimated gain of 552,000. A year ago, it added 928,000 postpaid wireless phone subscribers. Postpaid subscribers usually have unlimited monthly data plans.
Wireless services revenue increased 5.4% to $15.3 billion, topping estimates of $15.2 billion.
In addition, AT&T added 338,000 fiber broadband subscribers, surpassing views from 330,000 AT&T stock analysts.
AT&T stock is down 15% so far this year before the earnings report. Heading to AT&T’s earnings report, the telecom stock had a relative strength rating of 29 out of the top 99 possible, according to an IBD stock review.
WarnerMedia separated and merged with Discovery in early April. The new media company has been called up Discover Warner Bros. (WBD).
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