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Analysis of AT&T’s Economic Value

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Enterprise value of AT&T and its peers

The enterprise value of AT&T (T) is $356.2 billion. With the help of enterprise value, investors can gain a comprehensive understanding of a company’s value. This metric can be used as an alternative to measure a company’s market valuation.

AT&T’s peers Verizon (VZ), Charter Communications (CHTR), T-Mobile (TMUS), and Sprint (S) have enterprise values of ~$302.2 billion, ~$160.4 billion, ~$79.9 billion, and ~$66.9 billion, respectively.

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How does AT&T’s EV compare with its adjusted EBITDA[1. adjusted earnings before interest, tax, depreciation, and amortization] for the last 12 months? The company has EV-to-adjusted-trailing-12-month-EBITDA multiple of 7.2x. Its EV-to-EBITDA[2. enterprise value to earnings before interest, tax, depreciation, and amortization] for the current year is projected to be 6.8x.

A deeper look into AT&T’s EV ratios reveals that its EV-to-sales for the last one-year period was 2.2x. The EV-to-projected sales for 2018 totaled 2.2x.

The company’s trailing 12-month EV-to-cash-flow multiple was 8.8x, and its trailing 12-month EV-to-free cash flow to the company was 20.0x.

AT&T’s credit rating

Moody’s Investor Services’ rating on AT&T’s debt is WR (“withdrawn rating”). The company also has a Standard & Poor’s debt rating and debt outlook of BBB+ and “stable,” respectively.

Eye on AT&T’s price multiple

AT&T’s book value per share works out to $20.10, while its estimated book value per share is $19.80. The stock is trading at a price-to-book value of 1.9x.

The company’s current price-to-sales multiple is ~1.5x, and its estimated price-to-sales ratio is ~1.5x.

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