AT&T Inc.’s (T - Free Report) senior executive vice president and chief financial officer, John Stephens, recently provided an update to shareholders at the Bank of America Securities 2020 Media, Communications & Entertainment Conference. The Dallas, TX-based telecom and media giant aims to strengthen its balance sheet while investing in key growth areas. These include broadband connectivity in fiber and 5G and software-based entertainment like HBO Max and AT&T TV.
Stephens stated that AT&T has limited visibility into the extent of the impact of COVID-19. The company is investing in its transformation and efficiency efforts. It is confident of its ability to generate strong cash flows, thanks to the resiliency of wireless and broadband services and the demand for business connectivity. While the wireless market remains competitive, AT&T is benefiting from its investments over the past few years to improve network capacity.
The company’s high level of service quality and network resiliency during the current environment is helping it differentiate its wireless offerings. AT&T is benefiting from lower levels of wireless churn and growing adoption of Unlimited Elite wireless plans. It is providing access to 5G on its unlimited wireless plans for consumers and businesses. The company continues to invest in its wireless and wireline networks to expand coverage and improve connectivity. It connects more IoT devices than any other provider in North America.
Furthermore, the company’s customer base continues to grow driven by the ability to bundle HBO Max with its wireless services. AT&T is pleased with the initial success of HBO Max, including its activation growth and solid levels of viewer engagement. It also intends to launch an advertising-based version of HBO Max.
AT&T is expecting a dividend payout ratio in the 60% range at the end of 2020. The company plans to use excess cash after dividends to further reduce net debt. Since the close of the Time Warner transaction, it has reduced debt by almost $30 billion. AT&T is looking for non-core assets monetization opportunities to drive shareholder value.
The stock has lost 24.7% in the past year compared with 2% decline of the industry. The company has a dividend yield of 7.1% compared with the industry’s 4.1%.
AT&T carries a Zacks Rank #3 (Hold), at present.
Some better-ranked stocks in the broader industry are Turtle Beach Corporation (HEAR - Free Report) , Vocera Communications, Inc. (VCRA - Free Report) and Acacia Communications, Inc. (ACIA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Turtle Beach delivered a trailing four-quarter positive earnings surprise of 41%, on average.
Vocera delivered a trailing four-quarter positive earnings surprise of 70%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Acacia pulled off a trailing four-quarter positive earnings surprise of 17%, on average. The company’s earnings topped the consensus estimate in three of the last four quarters.
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