With expanded fiber networks and the completion of their 5G network, AT&T's business should grow and grow profitably. Now that AT&T has relieved itself of the burden of Time-Warner, it will be able to concentrate on the business it really knows: the telecommunications business or what I like to call the "phone" business. With the stock selling at $19.63 that gives a very conservative PE ratio of less than 8X.Īnd remember that at the last earnings call management projected earnings at $3.10 per share as I wrote about in this article " AT&T: Does Projected 2022 Earnings Of $3.10 Make AT&T A Buy Or A Sell?". If we take the Q1 earnings of $0.63 and just project it forward for the year we get a very conservative $2.52 per share earnings. If you look at T's projected earnings, it seems to be selling at a very reasonable price. So more cash is coming in the future and that will lead to higher dividends, debt paydown, and possible share buybacks. Perhaps more importantly for future FCFs beyond 2023, the FCF should grow because of the tapering off of investment after the majority of the fiber buildout and 5G capital expenses wind down.Īnd beyond 2023, this pace of cash generation will be helped by the tapering down of our capital investment. After paying dividends and non-controlling interest commitments, we expect to have at least $10 billion of cash remaining. Management also reiterated that 2023 FCF (Free Cash Flow) should be roughly $20 billion.Īs outlined at our Analyst Day, we expect to generate in the range of $20 billion of free cash flow in 2023. Cash flow was down, but that would be expected as T invests for the future including rapid fiber rollout and 5G implementation. AT&T Stock Key Metricsīecause the closing was not at the end of a quarter, the numbers reported by AT&T for Q1 2022 were after adjustments for the closing.īut the good news is the increase in both revenue and earnings compared to the same quarter last year. Therefore, at least so far, selling the WBD shares and buying AT&T shares on April 11 was exactly the right thing to do. In fact, AT&T has also handily beaten the S&P 500 ( SPY) by 9%. What has happened since April 11 is interesting as the WBD shares have dropped by 27% while the T shares have actually gone up 1% plus a $0.28 dividend on April 13. So theoretically, if you had sold the 0.224 shares of WBD you received for each old T share when it opened on April 11, you would have received for each WBD share $5.39 making the value of the old T share equal to $18.89 + $5.39 or $24.28 versus the previous day's close of $24.14 i.e. WBD opened at $24.08 and closed the day at $24.68. At that time T opened at $18.89 and closed at $19.63. The new shares of T and WBD started trading on April 11, 2022, after what was technically a 1324:1000 split. ![]() Doing The AT&T/Discovery Transaction Math I will also examine the prospects for AT&T now that it is no longer burdened by the enormous weight of Time Warner's $43 billion in debt and the enormous distraction Time Warner represented to management. In this article, I will examine the math of the original transaction and how AT&T shares have done since then. ![]() ![]() ![]() Those who did that have not lost money on the transaction, but those who held on to the WBD shares have suffered some losses. T shareholders had the option to either immediately sell the TBD shares and take the cash or sell the WBD shares and buy more T, which is what I recommended to my subscribers on April 15. This is a process that started on May 17, 2021, when T announced it was spinning off its Time-Warner subsidiary to Discovery in exchange for transferring $43 billion in debt to Discovery and subsequent ownership of 71% of Discovery shares. On April 11, 2022, AT&T ( NYSE: T) and Warner Brothers Discovery ( WBD) began trading on the NYSE as separate companies.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |