2024-03-07 06:45:00 ET
The stock market has slowly started to come to its senses about telecom giant AT&T (NYSE: T) . While the stock is still down significantly from its all-time high, shares have surged around 25% since they bottomed out in mid-2023.
Even after this rally, it's clear that a cloud of pessimism continues to hover over the stock. AT&T has a market capitalization of around $120 billion, and the company expects to generate between $17 billion and $18 billion of free cash flow this year. At the midpoint of that range, AT&T stock trades for less than 7 times free cash flow .
The stock also looks inexpensive based on earnings. AT&T expects to report adjusted earnings per share between $2.15 and $2.25 in 2024, a number that will be reduced by an increase in depreciation and a few other items. The company's decision to invest $14 billion in Open RAN technology meant to transform its network requires it to depreciate existing equipment at a quicker rate, which will hurt earnings through 2026. Even so, AT&T stock trades for less than 8 times the midpoint of its adjusted earnings guidance.
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Buy This Beaten-Down High-Yield Dividend Stock Before It's Too Late