AT&T (T) reported fourth-quarter results early Wednesday that beat estimates while earnings came in just below Wall Street’s targets. T-Aktie rocketed and moved into a buy zone as full-year free cash flow was impacted by the company’s own outlook.
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AT&T’s pre-market earnings reported excluded WarnerMedia, which spun off in early April 2022. The telecom giant said adjusted earnings from continuing operations were 61 cents in the fourth quarter, up 9% year over year. Revenue from continuing operations increased 0.8% to $31.3 billion.
According to FactSet, analysts had forecast AT&T earnings of 57 cents per share on sales of 31.4 billion US dollars. A year earlier, AT&T was earning 56 cents a share on revenue of $40.96 billion, but that included revenue from discontinued operations.
T-Share: 2023 Free Cash Flow Outlook
Additionally, AT&T reported full-year free cash flow of $14.1 billion, beating analyst estimates of $13.78 billion. AT&T had forecast free cash flow of $14 billion. 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 consider AT&T’s relatively conservative 2023 FCF guidance of $16 billion, including $24 billion in capital expenditures, to be the most important takeaway for print,” Well Fargo analyst Eric Luebchow said in a report .
He added, “With an outlook of ‘$16 billion or better,’ AT&T has issued guidance that we believe is reasonably conservative – with upside potential – that includes EBITDA growth. Capital spending is expected to moderate in 2024 and beyond. Importantly, this implies the dividend payout ratio is just over 50%, which gives a lot of financial headroom.”
Telekom said it expects adjusted earnings of $2.40 per share for 2023 at the midpoint of its outlook. This includes a negative effect of 25 cents from higher interest rates and taxes. In addition, T-Aktien analysts had forecast earnings of $2.56 per share on sales of $122.8 billion for 2023.
AT&T didn’t provide a revenue forecast for 2023.
In today’s stock market, the T-Share rose 6.3% to 20.36 in morning trade. The shares have an entry point of 19.62.
Postpaid Phone Subscribers Top Views
The company also announced that it added 656,000 postpaid mobile phone customers during the quarter versus an estimate of 645,000 increases.
But AT&T added 280,000 fiber broadband subscribers, missing analyst views for 330,000.
The t-share had gained 4% this year prior to the earnings report. Heading into AT&T’s earnings report, the stock held a relative strength rating of 62 out of a best possible 99, according to the IBD Stock Checkup.
WarnerMedia separated and merged with Discovery in early April 2022. The new media company is called Warner Bros. Discovery (WBD). WBD stock is up 40% in 2022.
Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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