What to Watch in AT&T’s Q4 Earnings

AT&T (NYSE:T) stock rose 0.18% in the pre-market trading session today at 9:28 AM ET. The stock fell 0.65% on Monday and closed the trading session at $38.25. Notably, the stock was trading 3.7% below its 52-week high of $39.70 and 32.30% above its 52-week low of $28.92. At the closing price on Monday, AT&T had a market cap of $279.4 billion.

AT&T’s fourth-quarter earnings

On Wednesday, AT&T is scheduled to report its fourth-quarter earnings results before the markets open. The company’s estimated fourth-quarter adjusted EPS is $0.87—1.2% growth YoY (year-over-year). However, the estimated adjusted EPS represents around a 7.4% sequential fall. Notably, the company has managed to meet or beat analysts’ adjusted EPS estimates for the last four quarters.

Wall Street analysts expect AT&T’s fourth-quarter revenues to be $47.0 billion—a 2.2% decline YoY. The reduction in the top line could be due to expected traditional pay-TV and online streaming video customer net losses. However, AT&T is expected to add postpaid phone customers despite stiff competition from Sprint (NYSE:S) and T-Mobile (NYSE:TMUS).

Investors should watch AT&T’s performance in its communications and WarnerMedia segments. Any significant fluctuation in the segments’ financials could have a direct impact on the company’s consolidated results. In AT&T’s communications segment, investors should track the wireless postpaid phone customer growth and the churn rate.

Investors should also watch for any major updates on AT&T’s 5G wireless network buildout.

Peers’ expectations

T-Mobile will likely release its fourth-quarter results in February. For the fourth quarter, analysts expect the company’s non-GAAP EPS to rise by 10.7% YoY to $0.83. They also expect T-Mobile’s revenue to rise by 3.3% YoY to $11.8 billion. The company will likely report around 1 million postpaid phone net customer additions in the fourth quarter.

On Monday, Sprint reported its earnings results for the third quarter of fiscal 2019. The company reported a non-GAAP EPS of -$0.08 compared to -$0.03 in the third quarter of 2018. The third-quarter revenues fell about 6.1% YoY to $8.1 billion.

Analysts’ recommendations

About 31 analysts cover AT&T stock as of today. Among the analysts, 15 recommend a “hold,” 14 recommend a “buy,” and two recommend a “sell.” According to analysts’ consensus, AT&T stock has a mean target price of $39.31 and a current market price of $38.25, which suggests an upside potential of 2.8% in the next 12 months. The median target price is $41.00 today.

Technical level

Based on the closing price on Monday, AT&T stock was trading 1.0% below its 20-day moving average of $38.65. The stock is also trading 0.5% below its 50-day moving average of $38.44 and 0.3% above its 100-day moving average of $38.14.

AT&T’s 14-day relative strength index score is 45. The score suggests that the stock isn’t overbought or oversold. AT&T’s upper, middle, and lower Bollinger Band levels are $39.58, $38.69, and $37.79, respectively. On Monday, the stock closed near its middle Bollinger Band level, which also suggested that it isn’t overbought or oversold. As of Monday, AT&T’s dividend yield was 5.44%.

Read Why You Should Wait for a Correction to Buy AT&T Stock and Is It Time to Exit AT&T Stock? to learn more.