What Does AT&T’s Current Valuation Indicate?

As of August 18, 2017, AT&T’s (T) market capitalization was ~$229.5 billion, making it the largest US telecom giant by market capitalization. By comparison, rival Verizon Communications (VZ) had a market capitalization of ~$194.5 billion, while T-Mobile’s (TMUS) market capitalization was ~$52.4 billion, and Sprint’s (S) market capitalization was ~$32.3 billion.

In the August 18 trading session, AT&T stock closed at $37.37, near its lower Bollinger Band level of $36.58. This indicates that AT&T’s stock is oversold.

AT&T’s short interest as a percentage of its float (or short interest ratio) on August 18, 2017, was ~6.6%. Usually, when a stock’s short interest ratio is greater than 40%, it indicates that investors and traders anticipate a correction in the stock’s price.

AT&T has an EV-to-EBITDA (enterprise value to earnings before interest, taxes, depreciation, and amortization) multiple of 6.52x. By contrast, peers Verizon, Sprint, and T-Mobile have EV-to-EBITDA multiples of 6.72x, 5.57x, and 7.02x, respectively.

AT&T is now trading at a PE (price-to-earnings) multiple of 12.48x, while Verizon, Sprint, and T-Mobile have PE multiples of 12.43x, 278.28x, and 23.87x, respectively.