AT&T’s forward PE ratio
AT&T (T) has fallen significantly year-to-date. This trend has made its stock cheaper. As of December 14, AT&T has a forward PE ratio of 8.6x for 2018, and its estimated PE ratio for 2019 is 8.5x. The forward PE ratios of Verizon (VZ), T-Mobile (TMUS), and Sprint (S) are 12.2x, 19.8x, and 109.2x, respectively, in their current years. On the basis of this multiple, AT&T stock is trading at a discount to its competitors.
The PE ratio tells us how much investors are willing to pay per dollar of a company’s EPS. It’s the simplest and most common valuation ratio. The forward PE ratio takes future earnings into consideration.
AT&T’s forward EV-to-EBITDA ratio
As of December 14, AT&T has estimated EV-to-EBITDA (enterprise value-to-EBITDA) ratios of 7.0x and 6.5x, respectively, for 2018 and 2019. The forward EV-to-EBITDA ratios of Verizon, T-Mobile, and Sprint are 7.3x, 7.1x, and 4.4x, respectively, in their current years. On the basis of this multiple, AT&T stock is trading at a discount to all of its competitors except Sprint.
A company’s EV is reflective of its market cap and net debt. A company’s forward EV-to-EBITDA ratio is based on analysts’ EBITDA estimates.