2024-02-06 09:00:00 ET
Summary
- AT&T's shares have been a disappointing investment, but recent upgrades and the company's strong free cash flow suggest undervaluation.
- Investor sentiment and competition pose risks, but AT&T's debt situation is improving and its core business is growing.
- AT&T's debt load is manageable, and the company's strong cash flow and solid 2023 fiscal year performance make it a bullish investment.
AT&T ( T ) is one of the most frustrating companies in which I have ever invested. While AT&T has climbed 32.76% since reaching its 52-week low of $13.43, it's still down -12.08% over the past year. Despite the strong level of profitability, shares of AT&T have been a destroyer of shareholder capital, declining -20.26% over the past 5-years, and leaving investors down -26.90% over the past decade prior to accounting for dividends. There are many reasons why AT&T has been a lackluster investment, from failed acquisitions to being saddled with an enormous amount of debt. AT&T was just upgraded by JPMorgan Chase ( JPM ) to overweight as they increased their price target from $18 to $21. While AT&T can be looked at as dead money, I think more investment firms are going to realize that the debt situation isn't as bad as it once seemed, their free cash flow ((FCF)) levels are strong, and the underlying business is growing. I still believe shares of AT&T are undervalued, and as painful as it is to see shares under $20, I think there is significant value to be unlocked, and investors can continue to get paid a 6.23% yield while AT&T's transformation continues....
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AT&T: Paving The Way To $20 With Upgrades And A 6.23% Dividend Yield