TBC - AT&T Stock: Upside Potential Is Still There
2024-03-19 23:32:00 ET
Summary
- I think it's now time to update my bullish thesis on AT&T, Inc. stock and find out if my previous "Buy" rating is still relevant.
- As far as I can see, AT&T's management has successfully cut costs and prioritized growth segments.
- I like what I see regarding debt management: AT&T's net debt to adjusted EBITDA ratio is ~3.2, which I think is close to normal following the generally accepted standards.
- The management is now focused on deleveraging and network expansion. FCF is going to grow >4% in 2024 despite a rise in CAPEX.
- My updated DDM model yields a new "fair value" of $20.55, which is nearly 19% above the current market price. I'm positive about the medium-term growth potential of AT&T stock and reiterate my previous "Buy" rating today.
Introduction
In early November 2023, I published an article here on Seeking Alpha about AT&T Inc. ( T ) stock with a 'Buy' rating, noting that the company's financial position and FCF generation prospects looked excellent. I also had a DDM model that said the stock was ~18% undervalued at the time. More than 3 months have passed since then, and AT&T stock has gained almost 12% in that time (the total return price), which is lower than the return of the S&P 500 ( SPX ), but still a pretty good result for a stock that has been declining rapidly in recent years....
AT&T Stock: Upside Potential Is Still There