TBC - AT&T Nearing An Inflection Point: Is It Time To Buy?

2024-05-23 07:05:00 ET

Summary

• AT&T's Q1 results showed solid progress, with increased free cash flow and debt reduction.
• The company expects to reach its long-term leverage target by H1 2025, with the potential for accelerating dividend growth and/or buybacks.
• We take a fresh look at T stock to see if it is finally time to buy it.

AT&T ( T ) recently reported its Q1 results , showing strong progress, particularly in increasing its free cash flow and paying down debt aggressively. Until now, my outlook on AT&T has been neutral to bearish due to the need to pay down its heavy debt burden consuming a lot of its discretionary cash flow and its aggressive investment needs for its 5G rollout and overall business model to maintain competitive positioning and growth. Consequently, I expected the dividend to remain largely stagnant, with only minimal increases each year moving forward. This made the relatively attractive current yield less appealing from a total return standpoint, especially given the company's unattractive EBITDA multiple compared to its history and the current high interest rates....

For further details see: