2023-07-15 07:50:00 ET
Shares of telecom giant AT&T (NYSE: T) are historically inexpensive. Based on the company's guidance for 2023, the stock trades at a measly 7 times free cash flow. The dividend yield is also on the high side, coming in at around 7.35%.
There are a couple of reasons why investors may be excited about AT&T stock. First, the company's growth is slowing after a period of rapid subscriber gains during the pandemic. AT&T expects to gain just 300 thousand net postpaid phone subscribers in the second quarter. That's less than half of what it was typically gaining in 2021.
Second, AT&T still has a lot of debt left over from its failed foray into the media business. While AT&T has spun off and otherwise disposed of its acquired media assets, including WarnerMedia, its balance sheet is still riddled with debt. At the end of the first quarter, AT&T's total debt stood at $137 billion. Investors are right to be concerned about this mountain of debt in a rising interest rate environment.
For further details see:
The Wild Card That Could Drag Down AT&T Stock