Today's notable surge in AT&T's stock value.
In the midst of a bearish market scenario, AT&T (T: 6.25%) shares are soaring, with a 7% increase by 3:15 p.m. ET. Conversely, the S&P 500 (-1.46%) and the Nasdaq Composite (-3.07%) are experiencing a fall of 1.8% and 3.6% respectively.
This impressive surge can be attributed to AT&T's impressive fourth-quarter earnings report. Not only did the telecom giant outshine Wall Street's expectations in terms of sales and earnings, but they also presented an optimistic outlook on their potential value returns to shareholders and plans in the field of artificial intelligence (AI).
Coming out on Top with Earnings Beats
AT&T started the day by publishing their fourth-quarter results before the market opened. The company reported sales and earnings that surpassed analyst estimates, posting an adjusted non-GAAP earnings per share (EPS) of $0.54 on sales of $32.3 billion. The EPS figure beat the $0.51 anticipated by analysts, while sales seemed to just scrape past the estimated $31.94 billion.
The company's revenue saw a minimal year-over-year increase of 0.9%, with solid growth in mobile and broadband services offsetting losses in wireline. The Mobility Services segment saw a 3.3% year-over-year revenue boost, resulted in approximately $16.6 billion in sales. On the other hand, Consumer broadband revenue skyrocketed by 7.8% to reach $2.9 billion. The telecom giant reported 482,000 net postpaid phone service additions and an impressive 307,000 fiber service additions for the quarter.
Future Plans and Financial Projections
In conjunction with its Q4 report, AT&T also shared some insights into their performance forecast for 2025. The company expects overall service revenue to register low-single-digit growth, with Mobility services slated for a growth range between 2% and 3%, and Fiber consumer broadband revenue with a mid-teens growth rate.
The company projects its adjusted EPS to fall between $1.97 to $2.07, excluding DirecTV. Moreover, management anticipates a free cash flow of approximately $16 billion for the year, albeit a drop from the previous year's $2.26 EPS and $17.6 billion in free cash flow.
Besides these financial projections, AT&T has also expressed a strong commitment to boosting their AI investments. The company plans to pump in substantial amount of funds into AI over the next three years to improve service efficiency, decrease operating costs, and enhance network performance. Additionally, they aim to return $40 billion to shareholders through dividends and stock buybacks over the next three years, bolstering shareholder value and confidence.
This strategic focus on AI and shareholder returns has certainly sparked enthusiasm among investors and has positively impacted market sentiment. Let's delve further into this AI strategy and return-to-shareholders plan in the following sections. [1][2][4][5]
Given the positive earnings report and future plans, investors may see potential in investing in AT&T's stock. The company's focus on artificial intelligence, promising financial projections, and commitment to returning funds to shareholders could attract investors interested in the finance and technology sectors, who maintain money in these areas. Additionally, as AT&T continues to innovate and improve its services, it may attract more customers, further boosting its financial performance and stock value.
