AT&T stock price continues to fire on all cylinders and is now sitting at a record high as its turnaround efforts continues. It has jumped in the last four consecutive weeks, meaning that it has surged by 75% in the last 12 months. This surge means that it has beaten the S&P 500 Index, which has risen by just 3.73%.
Turnaround continues to gain steam
AT&T stock price has done well as investors cheered the company’s turnaround strategy, including a dividend cut.
The turnaround also included the company exiting its media company, which led to the creation of Warner Bros. Discovery, a large, but struggling media entity. It also sold its stake in DirecTV to TPG, a deal expected to be completed this year.
These divestments helped the company to refocus on its core business, which has helped it to grow its business.
Further, the company has also improved its balance sheet, with its net-debt-to-adjusted EBITDA ratio reaching its target of 2.5x later this year. It will use proceeds of its DirecTV to pay its debt. This is a notable thing since AT&T is still one of the most indebted companies in Wall Street.
Read more: Long T: AT&T’s Robust Earnings and Strategic Initiatives Signal Potential Upside Towards $28
AT&T strong earnings
AT&T’s turnaround has helped it achieve steady revenue and profitable growth. This growth was also helped by the fact that the pricing wars that existed a few years ago seem to have ended now.
The most recent results showed that the company was doing well as the number of postpaid phone subscribers rose to 72.7 million in Q4, up from 71.3 million in the same period a year earlier.
This growth helped to push its mobility revenue up by 3.3% to $16.6 billion and its EBITDA to $8.9 billion.
AT&T’s fiber business, which is known for its dependable revenue growth is also doing well as the number of subscribers rose to 9.3 million. The revenue rose by 17% to $2 billion, while consumer wireline brought in $1.2 billion.
To be clear: AT&T has not become a growth company. Instead, it is a mature company experiencing slow growth, which is understandable. In such a situation, investors prefer one that achieves as high growth rate as possible while saving costs.
In this case, the company is working to achieve its cost target of $3 billion in savings by 2027. It is also using AI to achieve that.
Further, AT&T has embarked on a program to reward its shareholders. It has announced a $10 billion share repurchase program that will help to grow its earnings per share (EPS). In line with this, it has a strong dividend yielding about 3.3%.
AT&T is also doing better than its internal and analysts’ estimates. Its adjusted EBITDA growth target of 2024 was 3%, while its end figure was 3.1%. Also, its EPS of $2.25 was higher than its guidance.
AT&T stock price analysis
The daily chart shows that the AT&T share price continued its strong surge in the past few years. This rally continued this week since it will not be affected by Donald Trump’s tariffs.
It has moved above the key resistance level at $27.95, invalidating a double-top pattern that was forming. AT&T stock has also remained above all moving averages. Therefore, the stock will likely continue rising as bulls target the next psychological point at $30, followed by $35.
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