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What’s Behind AT&T’s Latest Valuation?

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AT&T’s scale

As of January 17, AT&T (T) was the second-largest US wireless carrier in terms of market cap, reporting a market cap of $223.0 billion. Verizon (VZ) has a market cap of $234.8 billion, T-Mobile’s (TMUS) market cap is $56.2 billion, and Sprint’s (S) market cap is $24.5 billion. 

Market cap, which reflects a company’s shares outstanding multiplied by its stock price, denotes a company’s market value at a particular point in time.

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AT&T’s forward PE ratio

On January 17, AT&T was trading at a 12-month forward PE ratio of 8.56x. In contrast, Verizon, T-Mobile, and Sprint were trading at 12-month forward PE ratios of 12.03x, 16.11x, and 105.85x, respectively. On the basis of this multiple, AT&T stock is trading at a discount to those of its peers.

AT&T’s forward EV-to-EBITDA ratio

On January 17, AT&T was trading at a 12-month forward EV-to-EBITDA (enterprise value-to-EBITDA) ratio of 6.56x. In contrast, Verizon, T-Mobile, and Sprint were trading at 12-month forward EV-to-EBITDA ratios of 7.15x, 6.58x, and 4.29x, respectively. On this basis, AT&T stock is trading at a discount to all its peers except for Sprint.

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