Investors have demonstrated their displeasure with AT&T (T ) over the last several years. But while the communication and internet giant’s Time Warner (TWX ) merger remains in question, AT&T stock does currently offer investors solid value.
Time Warner’s chief executive, Jeffrey Bewkes, defended his company’s $85.4 billion merger with AT&T in federal court last month. At the time, he argued that the Justice Department’s lawsuit to block the merger would harm consumers as tech giants, including Netflix (NFLX ) and Amazon (AMZN ) , become more and more powerful. With that said, it is still unclear if the proposed merger will be completed.
Meanwhile, AT&T has geared up to launch the first standards-based mobile 5G services to consumers in multiple U.S. markets by the end of 2018. The wireless powerhouse is also expected to see its bottom line surge this year. Furthermore, the company’s stock price has sunk to the point where investors should take notice.
Let’s dive into AT&T’s recent price movement in order to gain a better understanding of the company’s current valuation.
Recent Price Movement
Shares of AT&T are down 15.6% over the last year and have also sunk nearly 8% in the last four weeks alone. Looking a bit further back, AT&T’s stock price has fallen 7.4% during the last three years, while the S&P 500 has surged 27.4%.
AT&T did see its stock price pop over 1.6% on Monday, as part of a much broader market-wide climb. Despite Monday’s gain, at $32.59 per share, AT&T currently sits well below its 52-week high of $39.8 per share, which it touched last September.
AT&T stock also traded as high as $38 per share as recently as late January. Therefore, based on its stock price alone, AT&T stock is technically relatively cheap. But we still need to know a lot more before investors can say with some confidence that A&T stock is really a good deal at the moment.
Coming into Monday, AT&T was trading at 9.3X forward 12-months earnings estimates. The stock has traded as high as 13.3X over the past year, with its median resting at 12.2X. Investors should also be excited to note that AT&T stock is trading just slightly above its 52-week low forward P/E ratio of 9.1, which it hit earlier this month.
AT&T has also traded at a significant discount to the S&P 500 over the past year and is currently trading well below the index’s 16.9X. On top of that, T stock is trading at a discount compared to the “Wireless National” industry’s average of 11.4X.
Jumping a bit farther back, investors can see that AT&T stock is trading right around its lowest earnings multiple of the last three years. Therefore, investors should be able to say that AT&T stock is attractive at its current valuation, and rather cheap compared to where it has traded at recently.
Lastly, it is worth considering AT&T’s current bottom-line growth outlook as it directly impacts its valuation. The company is projected to see its second-quarter earnings pop by 12.7% to hit $0.89 per share, based on our current Zacks Consensus Estimates.
For the current full-year, AT&T’s earnings are projected to reach $3.42 per share, which would also mark over a 12% climb.
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