AT&T’s Earnings Results

After reporting a solid quarterly earnings report, AT&T’s (NYSE: T) rally to over $39 a share proved short-lived. The market correction that ensued at the start of February pulled T stock lower. Investors are forgetting AT&T’s Q4 results already.

AT&T earned $0.78 a share on revenue of $41.7 billion. Both numbers beat consensus. But two headwinds will hurt the stock price performance near-term. First are concerns of rate hikes. The 10-yield bond yield is creeping up towards 3 percent. Second, the Time Warner (TWX) acquisition could be on hold as regulators look at the deal.

Investors should note, too, that the dividend payout also added to the ex-dividend stock price drop. It still creates an excellent entry point for investors. AT&T is forecasting a solid $3.50 a share forecast for 2018. Cash flow is increasing. This virtually guarantees a steady increase in dividends year after year.

Revisiting $33 Price Unlikely

AT&T is unlikely to revisit the $33 ($32.55 to be exact) bottom in November 2017 again. The stock is a deep value play now with a P/E of 7.5 times. The dividend yield is a rich 5.55 percent.

Once the telecom giant gets past hurdles for acquiring Time Warner, the combination of media content and the telecom pipeline cash flow will reward shareholders.