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What AT&T’s Valuations Indicate

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Price movements for AT&T

On March 6, 2018, AT&T’s (T) stock price closed at $36.87. The telecom company’s stock price fell 12.1% in the trailing year. In comparison, Sprint (S) and Verizon (VZ) have seen their stock prices fall 39.1% and 2.3%, respectively, in the trailing year. Meanwhile, T-Mobile’s (TMUS) stock price increased by 1.2% in the trailing year.

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AT&T’s forward PE valuation

Taking into account the relatively visible and stable nature of AT&T’s earnings, the two most compelling valuation multiples are forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) and forward price-to-earnings (or PE) multiples. On March 6, 2018, AT&T was trading at a forward PE multiple of ~10.7x, which was higher than Verizon’s ~10.5x. Meanwhile, T-Mobile had a forward PE multiple of ~15.4x.

AT&T’s forward EV-to-EBITDA valuation

On March 6, 2018, AT&T’s forward EV-to-EBITDA metric was ~6.5x, which was higher than Sprint at ~4.6x. Meanwhile, Verizon and T-Mobile had forward EV-to-EBITDA ratios of ~6.5x and ~6.6x, respectively.

Analyst recommendations

As of March 6, 2018, 29 analysts from different brokerage firms are actively tracking AT&T stock. About 62% recommended a “hold,” ~35% of the analysts recommended a “buy,” and ~3% recommended a “sell.”

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