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Tag: AT&T Inc.

  • AT&T’s stock soars toward best day in 3 years as lead-cable update sparks relief

    AT&T’s stock soars toward best day in 3 years as lead-cable update sparks relief

    After failing to close in positive territory for a 10th session in a row Tuesday, AT&T Inc. shares were tracking toward a sizable gain in Wednesday’s trading activity.

    The telecommunications stock was up 8.4% in morning trades as recent company commentary suggested to some analysts that AT&T’s
    T,
    +7.62%
    exposure to lead-clad cables may not be as significant as feared. The company estimates that lead-clad cables represent less than 10% of its copper-cable footprint and that “a very small portion” of those run underwater.

    See more: AT&T to pause prior plans to remove lead cables under Lake Tahoe as it works with regulators

    AT&T shares have taken a beating lately after reporting from the Wall Street Journal keyed in on lead-sheathed cables used historically by the telecommunications industry, which the story said posed health risks.

    The stock had gone 10 full trading sessions in a row prior to Wednesday without notching a gain, factoring in one session of flat performance. It fell 16.6% over that 10-session stretch, AT&T’s longest without a daily increase since one of equal length that ended Oct. 21, 2020, according to Dow Jones Market Data.

    AT&T shares were on track to log their largest single-day percentage gain since March 13, 2020, when they rose 10%, according to Dow Jones Market Data.

    Read also: Verizon’s lead ‘overhang’ may limit dividend increases, analyst says in downgrade

    The company late Tuesday held a call with analysts and released a legal filing that left Oppenheimer’s Timothy Horan with the sense that the company’s exposure to lead cable was less than Wall Street initially expected, meaning potential removal costs could be lower than he had anticipated.

    “We think [AT&T] is being conservative, but less than 10% of its footprint [or about 200,000 miles] are lead-sheathed, three-fourths of which are conduits buried underground that should likely just remain in place,” Horan wrote. “Even cables that are not buried can be left for long periods of time when safely sealed up and labeled. We believe a small minority will need to be removed, but expect [AT&T] to give more details on its earnings call next week, sooner than expected.”

    He now estimates that the company could incur $2 billion to $20 billion in costs related to its exposure to lead-coated cables, whereas he had thrown out a “best guess” of $5 billion to $50 billion before Tuesday’s updates.

    Cowen’s Gregory Williams was also encouraged by the disclosures AT&T made late Tuesday.

    “Naturally, AT&T could not provide definitive conclusions at this time; however the company summarized the data from the court filing and essentially provided a compelling framework around the allegations,” he wrote in a note to clients. “The framework suggests a high conviction that any lead-clad cable exposure will result in very minimal health, environmental, regulatory, and financial risks, if any risk at all, and something we had suspected over the past few days of our own conversations and research.”

    Shares of Verizon Communications Inc.
    VZ,
    +5.18%
    were rallying sharply as well, up 5.4% in morning action.

    Read on: Verizon CEO says the wireless market isn’t such a bad business after all

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  • AT&T’s stock sinks toward 30-year low as it nabs another downgrade

    AT&T’s stock sinks toward 30-year low as it nabs another downgrade

    Shares of AT&T Inc. were falling again Monday after a Citi Research analyst weighed in with a more cautious view in light of recent reporting on legacy use of lead-sheathed cables within the telecommunications industry.

    Citi’s Michael Rollins cut his rating on AT&T’s stock
    T,
    -6.69%
    to neutral from buy Monday, writing that it was among names that could see an “overhang” following The Wall Street Journal’s recent reporting on risks related to industry’s historical use of lead-sheathed cabling as Wall Street works to understand potential financial implications.

    He also downgraded shares of Frontier Communications Parent Inc.
    FYBR,
    -15.79%
    and Telephone & Data Systems Inc.
    TDS,
    -8.38%
    to neutral from buy, and he already had a neutral rating on Verizon Communications Inc.’s stock
    VZ,
    -7.50%    .

    “First, copper network deployed with possible lead sheathing could be a significant percentage of the legacy network deployed nationally with varying exposures for each firm,” Rollins wrote. He said he was “unable to specifically quantify financial risks (if anything material)” for wireline telecommunications companies stemming from these issues, though “the timing to receive more information could take at least a couple months and full resolution could take years.”

    AT&T’s stock was off 3.8% in Monday morning action, to a recent $13.95, and on track to close at its lowest level since March 24, 1993, according to Dow Jones Market Data. The stock is on pace to spend a ninth-straight session without a daily gain, factoring in one day of flat performance last week alongside a string of daily losses.

    “We still expect the company to display forward progress on cash flow generation and setting the stage to reduce net debt leverage over the next two years before considering any potential liabilities, if anything material, associated with lead sheathed cables,” Rollins wrote, though he called out “uncertainty from the industry’s use of lead-sheathed cabling” as a key reason for the downgrade.

    See also: AT&T sees ‘incredibly healthy’ wireless market, even as several factors will ding growth this quarter

    Frontier shares were down 8.2%, while TDS shares were off 5.0%. Verizon’s stock was down 1.6% and on pace for its eighth consecutive losing session.

    USTelecom, a trade association that counts AT&T and Verizon as members, said in a statement that the telecommunications industry “has a long tradition of closely following science and evidence as it relates to public health, environmental protection, and worker safety issues,” while “safe work practices within the industry have proven effective in reducing potential lead exposures to workers.”

    There are “many considerations” that go into deciding whether to remove legacy cables, “including those regarding the safety of workers who must handle the cables, potential impacts on the environment, the age and composition of the cables, their geographic location, and customer needs as well as the needs of the business and infrastructure demands,” the spokesperson continued.

    The trade group said in a prior statement that it had “not seen, nor have regulators identified, evidence that legacy lead-sheathed telecom cables are a leading cause of lead exposure or the cause of a public health issue.”

    Representatives from Frontier and TDS couldn’t immediately be reached for comment.

    Rollins noted in his report that “Verizon and AT&T indicated their expectation as that the exposure should be small,” though he said that “for Verizon, we learned the term ‘small’ could be as much as 20% of its copper network infrastructure.”

    Don’t miss: Verizon CEO says the wireless market isn’t such a bad business after all

    He joined JPMorgan’s Philip Cusick, who downgraded AT&T’s stock Friday and mentioned potential lead-cable liabilities as a concern.

    SVB MoffettNathanson analyst Craig Moffett weighed in on the issue as well Monday, calling out heavy uncertainty.

    “The unsatisfying, but honest, answer is that at this point we have nothing but unknowns to work with and no real way to quantify the companies’ exposures,” he wrote. “Lead risk is clearly not a good thing, but we don’t know how bad it will ultimately be. It would be disingenuous to try putting firm numbers around it.”

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  • AT&T stock moves higher after earnings as subscriber growth story continues

    AT&T stock moves higher after earnings as subscriber growth story continues

    Shares of AT&T Inc. were rising in premarket trading Wednesday after the company swung to a loss upon taking restructuring charges, but beat earnings expectations on an adjusted basis and showed continued subscriber growth in its fourth quarter.

    The company posted a loss from continuing operations of $23.1 billion, or $3.20 a share, whereas it earned $5.2 billion, or 66 cents a share, a year-earlier. The loss includes $3.57 cents a share of non-cash impairment, abandonment, and restructuring charges, among other factors.

    …

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  • 20 dividend stocks that may be safest if the Federal Reserve causes a recession

    20 dividend stocks that may be safest if the Federal Reserve causes a recession

    Investors cheered when a report last week showed the economy expanded in the third quarter after back-to-back contractions.

    But it’s too early to get excited, because the Federal Reserve hasn’t given any sign yet that it is about to stop raising interest rates at the fastest pace in decades.

    Below is a list of dividend stocks that have had low price volatility over the past 12 months, culled from three large exchange traded funds that screen for high yields and quality in different ways.

    In a year when the S&P 500
    SPX,
    -0.40%
    is down 18%, the three ETFs have widely outperformed, with the best of the group falling only 1%.

    Read: GDP looked great for the U.S. economy, but it really wasn’t

    That said, last week was a very good one for U.S. stocks, with the S&P 500 returning 4% and the Dow Jones Industrial Average
    DJIA,
    -0.32%
    having its best October ever.

    This week, investors’ eyes turn back to the Federal Reserve. Following a two-day policy meeting, the Federal Open Market Committee is expected to make its fourth consecutive increase of 0.75% to the federal funds rate on Wednesday.

    The inverted yield curve, with yields on two-year U.S. Treasury notes
    TMUBMUSD02Y,
    4.540%
    exceeding yields on 10-year notes
    TMUBMUSD10Y,
    4.064%    ,
    indicates investors in the bond market expect a recession. Meanwhile, this has been a difficult earnings season for many companies and analysts have reacted by lowering their earnings estimates.

    The weighted rolling consensus 12-month earning estimate for the S&P 500, based on estimates of analysts polled by FactSet, has declined 2% over the past month to $230.60. In a healthy economy, investors expect this number to rise every quarter, at least slightly.

    Low-volatility stocks are working in 2022

    Take a look at this chart, showing year-to-date total returns for the three ETFs against the S&P 500 through October:


    FactSet

    The three dividend-stock ETFs take different approaches:

    • The $40.6 billion Schwab U.S. Dividend Equity ETF
      SCHD,
      +0.15%
      tracks the Dow Jones U.S. Dividend 100 Indexed quarterly. This approach incorporates 10-year screens for cash flow, debt, return on equity and dividend growth for quality and safety. It excludes real estate investment trusts (REITs). The ETF’s 30-day SEC yield was 3.79% as of Sept. 30.

    • The iShares Select Dividend ETF
      DVY,
      +0.45%
      has $21.7 billion in assets. It tracks the Dow Jones U.S. Select Dividend Index, which is weighted by dividend yield and “skews toward smaller firms paying consistent dividends,” according to FactSet. It holds about 100 stocks, includes REITs and looks back five years for dividend growth and payout ratios. The ETF’s 30-day yield was 4.07% as of Sept. 30.

    • The SPDR Portfolio S&P 500 High Dividend ETF
      SPYD,
      +0.60%
      has $7.8 billion in assets and holds 80 stocks, taking an equal-weighted approach to investing in the top-yielding stocks among the S&P 500. It’s 30-day yield was 4.07% as of Sept. 30.

    All three ETFs have fared well this year relative to the S&P 500. The funds’ beta — a measure of price volatility against that of the S&P 500 (in this case) — have ranged this year from 0.75 to 0.76, according to FactSet. A beta of 1 would indicate volatility matching that of the index, while a beta above 1 would indicate higher volatility.

    Now look at this five-year total return chart showing the three ETFs against the S&P 500 over the past five years:


    FactSet

    The Schwab U.S. Dividend Equity ETF ranks highest for five-year total return with dividends reinvested — it is the only one of the three to beat the index for this period.

    Screening for the least volatile dividend stocks

    Together, the three ETFs hold 194 stocks. Here are the 20 with the lowest 12-month beta. The list is sorted by beta, ascending, and dividend yields range from 2.45% to 8.13%:

    Company

    		 Ticker

    		 12-month beta

    		 Dividend yield

    		 2022 total return
    Newmont Corp.

    		 NEM,
    -0.78%         		0.17

    		 5.20%

    		 -30%
    Verizon Communications Inc.

    		 VZ,
    -0.07%         		0.22

    		 6.98%

    		 -24%
    General Mills Inc.

    		 GIS,
    -1.47%         		0.27

    		 2.65%

    		 25%
    Kellogg Co.

    		 K,
    -0.93%         		0.27

    		 3.07%

    		 22%
    Merck & Co. Inc.

    		 MRK,
    -1.73%         		0.29

    		 2.73%

    		 35%
    Kraft Heinz Co.

    		 KHC,
    -0.56%         		0.35

    		 4.16%

    		 11%
    City Holding Co.

    		 CHCO,
    -1.45%         		0.38

    		 2.58%

    		 27%
    CVB Financial Corp.

    		 CVBF,
    -1.24%         		0.38

    		 2.79%

    		 37%
    First Horizon Corp.

    		 FHN,
    -0.18%         		0.39

    		 2.45%

    		 53%
    Avista Corp.

    		 AVA,
    -7.82%         		0.41

    		 4.29%

    		 0%
    NorthWestern Corp.

    		 NWE,
    -0.21%         		0.42

    		 4.77%

    		 -4%
    Altria Group Inc

    		 MO,
    -0.18%         		0.43

    		 8.13%

    		 4%
    Northwest Bancshares Inc.

    		 NWBI,
    +0.10%         		0.45

    		 5.31%

    		 11%
    AT&T Inc.

    		 T,
    +0.63%         		0.47

    		 6.09%

    		 5%
    Flowers Foods Inc.

    		 FLO,
    -0.44%         		0.48

    		 3.07%

    		 7%
    Mercury General Corp.

    		 MCY,
    +0.07%         		0.48

    		 4.38%

    		 -43%
    Conagra Brands Inc.

    		 CAG,
    -0.82%         		0.48

    		 3.60%

    		 10%
    Amgen Inc.

    		 AMGN,
    +0.41%         		0.49

    		 2.87%

    		 23%
    Safety Insurance Group Inc.

    		 SAFT,
    -1.70%         		0.49

    		 4.14%

    		 5%
    Tyson Foods Inc. Class A

    		 TSN,
    -0.40%         		0.50

    		 2.69%

    		 -20%
    Source: FactSet

    Any list of stocks will have its dogs, but 16 of these 20 have outperformed the S&P 500 so far in 2022, and 14 have had positive total returns.

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    Don’t miss: Municipal bond yields are attractive now — here’s how to figure out if they are right for you

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  • AT&T stock surges toward best day since 2020 as earnings mark a ‘step forward’

    AT&T stock surges toward best day since 2020 as earnings mark a ‘step forward’

    Shares of AT&T Inc. were up more than 9% in morning trading Thursday after the telecommunications company topped profit expectations and posted another quarter of sizable subscriber gains.

    The company saw 708,000 postpaid phone net additions during the period, building on the 1.5 billion such net additions it saw during the first half of the year. Postpaid phone churn in the latest quarter was 0.84%.

    The subscriber traction reflected “more of the same,” AT&T’s
    T,
    +9.01%
    investor relations head Amir Rozwadowski told MarketWatch. While he said that some wireless competitors have been adjusting their promotions every few weeks, he added that AT&T has stayed more consistent with its strategy, something he saw as beneficial for consumers, who understand what the company is offering, and store associates, who don’t have to make major adjustments to their messaging.

    AT&T also added 338,000 net fiber subscribers in the third quarter.

    Shares were up 9.5% in Wednesday morning trading and on track to log their best single-day performance since March 13, 2020, when they rose 10.0%. The stock is also on track to log its best post-earnings gain since at least 1997, according to Dow Jones Market Data.

    Revenue came in at $30.0 billion, down from $31.3 billion a year before, though up from $29.1 billion in revenue for standalone AT&T when adjusting for business divestments. The FactSet consensus was $29.8 billion in revenue.

    AT&T attributed the drop in headline revenue during the latest quarter to the divestment of its U.S. video business last July as well as lower business wireline revenue. Those trends were partially offset by higher mobility revenue.

    AT&T expects growth in mobility service revenues at the “upper end” of the 4.5% to 5% range for the full year. It gave a target of 4.5% to 5% growth in its second-quarter report.

    “Our results demonstrate that the strategy we put forward more than two years ago is the right strategy for not only the future of our business, but for the future of the communications industry,” Chief Executive John Stankey said on the company’s earnings call.

    The current inflationary backdrop impacts both consumers and AT&T, and the company recently raised prices on some legacy plans recently as it dealt with its own inflationary costs. Despite financial pressures on consumers, Rozwadowski said that AT&T has seen consumers trade up to higher-tier plans more generally because they see more value in those plans.

    While he said that AT&T was “certainly seeing signs of inflation across our business,” he also emphasized that consumers seem to have a strong appreciation for connectivity services as they evaluate their expenses. “You need phone and broadband probably more now than in the last recession,” Rozwadowski said.

    AT&T executives highlighted last quarter that some consumers were taking a bit longer to pay their bills, though they ultimately were still paying them. The company is “not seeing any material change relative to what we saw last quarter,” Rozwadowski said, as customer payment cycles are holding steady at pre-pandemic levels.

    The company posted third-quarter income from continuing operations of $6.3 billion, or 79 cents a share, compared with $5.0 billion, or 63 cents a share, in the year-prior quarter.

    After adjustments for actuarial gains on benefit plans and some other factors, AT&T notched 68 cents a share in earnings from continuing operations, up from 66 cents a share a year earlier, and also above the 62 cents a share in earnings from continuing operations for standalone AT&T during that year-ago period. The standalone number accounts for the fact that the company divested its U.S. video business last summer.

    Analysts tracked by FactSet were modeling 61 cents a share in adjusted earnings for AT&T’s third quarter.

    Citi Research analyst Michael Rollins called AT&T’s latest earnings a “step forward,” highlighting that they “reflect a better balance of profitability relative to its revenue growth.”

    “Results show that AT&T remains highly-competitive in wireless, while showing forward progress on improving fiber net adds with its expanding footprint,” he continued in a note to clients.

    AT&T generated $3.8 billion in free-cash flow from continuing operations during the September quarter, and Chief Financial Officer Pascal Desroches shared on the earnings call that AT&T felt “good about our line of sight to achieving our free-cash flow target in the $14 billion range for the year.”

    Rozwadowski said that the company was focused on putting cash back into the network.

    “The business is generating a healthy amount of cash,” he said, and by investing that money in network improvements, AT&T hopes to achieve a “flywheel effect” since an enhanced network can help the company retain customers and convince them to pay up for more expensive plans.

    Desroches added on the earnings call that AT&T was “very comfortable with our cash levels after paying our dividend commitment” and said that “this should only increase in future years as we expect cash conversion to improve from here.”

    The company models adjusted earnings per share from continuing operations of “$2.50 or higher” for the full year, while analysts tracked by FactSet were looking for $2.53.

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  • AT&T stock gains after earnings beat, driven by continued subscriber rush

    AT&T stock gains after earnings beat, driven by continued subscriber rush

    Shares of AT&T Inc. were up 2% in premarket trading Thursday after the telecommunications company topped profit expectations for its latest quarter.

    The company posted third-quarter income from continuing operations of $6.3 billion, or 79 cents a share, compared with $5.0 billion, or 63 cents a share, in the year-prior quarter.

    After adjustments for actuarial gains on benefit plans and some other factors, AT&T
    T,
    -0.38%
    notched 68 cents a share in earnings from continuing operations, up from 66 cents a share a year earlier, and alone above the 62 cents a share in earnings from continuing operations for standalone AT&T during that year-ago period. The standalone number accounts for the fact that the company divested its U.S. video business last summer.

    Analysts tracked by FactSet were modeling 61 cents a share in adjusted earnings for AT&T’s third quarter.

    Revenue came in at $30.0 billion, down from $31.3 billion a year before, though up from $29.1 billion in revenue for standalone AT&T. The FactSet consensus was for $29.8 billion in revenue.

    AT&T attributed the drop in headline revenue during the latest quarter to the divestment of its U.S. video business last July as well as lower business wireline revenue. Those trends were partially offset by higher mobility revenue.

    The company saw 708,000 postpaid phone net additions during the period, while postpaid phone churn was 0.84%.

    AT&T expects growth in mobility service revenues at the “upper end” of the 4.5% to 5% range for the full year. It gave a target of 4.5% to 5% growth in its second-quarter report. The company also models adjusted earnings per share from continuing operations of “$2.50 or higher” for the full year, while analysts tracked by FactSet were looking for $2.53.

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