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AT&T’s Valuations Compared to Its Peers

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AT&T’s scale

On August 31, AT&T’s (T) market capitalization was ~$232.1 billion, making it the largest US wireless carrier in terms of market cap. In comparison, Verizon (VZ) had a market capitalization of ~$226.2 billion, T-Mobile’s (TMUS) market cap was ~$55.9 billion, and Sprint’s (S) market cap was ~$24.9 billion.

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Bollinger Band

In the August 31 trading session, AT&T stock closed at $31.94, which is closer to its lower Bollinger Band level of $31.75. This indicates that AT&T stock is oversold, which investors could take as a “buy” signal.

AT&T’s valuation metrics

Valuation metrics consist of price-based multiples and earnings-based multiples. On August 31, AT&T had a trailing-12-month EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of ~8.4x in comparison to the multiples of its closest competitors.

Verizon, T-Mobile, and Sprint had trailing-12-month EV-to-EBITDA multiples of ~7.3x, ~7.8x, and ~4.9x, respectively. AT&T expects its 2018 EV-to-EBITDA to reach ~7.3x. Its 2019 multiple is expected to reach ~6.7x.

AT&T is currently trading at a PE (price-to-earnings) multiple of ~17.2x. This is lower than T-Mobile’s PE multiple of ~22.9x and higher than Verizon’s multiple of ~15.8x. AT&T’s PE multiple is expected to reach ~9.1x in 2018 and ~8.8x in 2019.

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