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What’s Driving AT&T’s Earnings Growth?

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AT&T’s earnings in the last few quarters

In the last few quarters, AT&T (T) has managed to either meet or beat analysts’ EPS (earnings per share) estimates. AT&T reported decent EPS and margin expansion in 4Q16 though revenue was marginally down. AT&T’s earnings rose YoY (year-over-year) in 4Q16. AT&T’s earnings met Wall Street consensus expectations for 4Q16. AT&T’s EPS rose ~4.8% YoY to reach $0.66 in 4Q16 from $0.63 in 4Q15.

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AT&T’s consensus versus actual earnings

AT&T’s earnings were mostly in line with Wall Street’s expectations in 4Q16, 3Q16, 2Q16, and 4Q15. However, they were 4.3% higher than Wall Street analyst expectations in 1Q16.

Although AT&T is facing intense competition from aggressive marketing by smaller rivals T-Mobile (TMUS) and Sprint (S), the carrier said it added 2.8 million wireless subscribers in 4Q16. The gains were driven by its expansion into Mexico and the rise of connected devices, thanks to the Internet of Things.

In comparison, Verizon’s (VZ) adjusted EPS fell ~3.4% YoY to reach $0.86 in 4Q16 on the exclusion of pension re-measurement and severance costs during the quarter.

In the next part, we’ll look at revenue growth from AT&T in 4Q16.

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