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AT&T Stock Falls 11.8% in a Year: Should You Buy the Dip?
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Key Takeaways
AT&T shares have declined 11.8% in a year, underperforming the wireless industry's 106.9% growth.
AT&T added 769,000 Internet connections in Q3, while advanced home Internet revenues rose 23.4%.
AT&T trades at 8.62 times forward earnings, but $149.8 billion in net debt and pricing pressures pose risks.
AT&T, Inc. (T - Free Report) has declined 11.8% over the past year against the Wireless National industry’s growth of 95%. The stock has underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
T outperform its peers like T-Mobile (TMUS - Free Report) but underperformed Verizon (VZ - Free Report) . T-Mobile declined 20.1% while Verizon gained 15.8% during this time period.
Key Growth Drivers for T
AT&T is benefiting from its aggressive fiber network expansion and improving wireless operations. During the third quarter, the company added a record 769,000 consumer and business Internet connections, comprising 442,000 fiber and 327,000 fixed wireless connections. It also gained 379,000 postpaid phone subscribers, while postpaid phone churn stood at 0.92%.
The company's Advanced Connectivity segment generated $29.48 billion in revenues, up 7.2% year over year. Service revenues increased 6.1% to $23.9 billion, supported by higher wireless subscriptions and broadband demand. Advanced home Internet revenues jumped 23.4% to $2.98 billion, reflecting customer additions and contributions from the acquired Lumen fiber business.
AT&T is also making steady progress in its convergence strategy, which focuses on providing wireless and broadband services to the same households. The advanced home Internet convergence rate improved to 42.8% from 42.5% in the preceding quarter. Its converged customer base expanded by approximately 350,000 during the third quarter. Such bundled relationships can strengthen customer loyalty and support recurring service revenues over time.
The acquisition of Lumen's mass-market fiber business and continued infrastructure deployment have strengthened AT&T's broadband footprint. The company reached approximately 39.7 million fiber locations by the end of the third quarter. It remains on track to surpass 40 million locations by the end of 2026 and more than 60 million by 2030. A larger fiber network offers opportunities to attract broadband subscribers and cross-sell wireless services.
AT&T's enterprise connectivity business is another growth avenue. Business fiber and advanced connectivity revenues increased 8.7% year over year to $1.99 billion in the third quarter. Growing demand for high-capacity networks, particularly from data centers and AI-related applications, could support future opportunities. AT&T's fiber infrastructure is positioned close to a substantial portion of U.S. data centers, while its connectivity relationships with AWS and Microsoft strengthen its exposure to this market.
Major Challenges for T
Despite solid growth in fiber and wireless services, intense competition remains a concern. It faces competition from major players such as Verizon, T-Mobile. AT&T operates in a saturated U.S. wireless market, where aggressive promotions and discounted service plans can limit pricing flexibility. Although wireless service revenues grew 5% in the third quarter, promotional incentives partially offset the benefits of subscriber growth and pricing actions.
Introductory broadband pricing is also affecting revenue generation per customer. Fiber average revenue per user declined 4% year over year during the third quarter as discounted plans, convergence benefits and lower-priced customers from the acquired Lumen operations weighed on the metric. Persistent pricing pressure could constrain revenue growth and profitability despite higher subscriber additions.
The continued contraction of the Legacy business presents another challenge. Segment revenues declined 24.5% year over year to $1.52 billion in the third quarter, while EBITDA fell 26.7% to $498 million. AT&T expects Legacy service revenues to decline more than 20% in 2026 and become immaterial by the end of 2029. Although network retirement should eventually lower operating costs, the transition is expected to weigh on segment earnings in the interim.
The company's elevated debt burden is also a significant concern. AT&T ended the third quarter with net debt of $149.8 billion, up from $126.4 billion in the previous quarter, primarily due to its $23 billion spectrum acquisition from EchoStar. Its net debt-to-adjusted EBITDA ratio increased to 3.13 times from 2.68 times sequentially.
Moreover, substantial infrastructure spending, customer acquisition expenses and shareholder distributions continue to compete for available cash. AT&T anticipates capital investment of $23-$24 billion in 2026 and $22-$23 billion annually in 2027 and 2028. Higher interest expenses and the ongoing requirement to invest in fiber and wireless capacity could limit near-term financial flexibility.
Estimate Revision of T
Earnings estimates for AT&T have moved up 2.14% to $2.39 and declined 0.4% to $2.56, respectively, for fiscal 2026 and fiscal 2027, over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company's shares currently trade at 8.62 forward earnings, lower than 23.49 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T's expanding fiber footprint, improving wireless customer additions and growing converged subscriber base provide a favorable foundation for long-term growth. Its business connectivity opportunities, efficiency initiatives and improving adjusted profitability are encouraging. The raised earnings outlook and multiyear free cash flow targets further support its investment prospects.
Nevertheless, competitive promotional activity, declining fiber revenue per customer and continued erosion in legacy services remain headwinds. The sharp increase in debt following the EchoStar spectrum acquisition and substantial capital commitments also constrain financial flexibility. With a Zacks Rank #3 (Hold), AT&T offers a relatively balanced outlook, suggesting that new investors should approach the stock cautiously. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
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AT&T Stock Falls 11.8% in a Year: Should You Buy the Dip?
Key Takeaways
AT&T, Inc. (T - Free Report) has declined 11.8% over the past year against the Wireless National industry’s growth of 95%. The stock has underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
T outperform its peers like T-Mobile (TMUS - Free Report) but underperformed Verizon (VZ - Free Report) . T-Mobile declined 20.1% while Verizon gained 15.8% during this time period.
Key Growth Drivers for T
AT&T is benefiting from its aggressive fiber network expansion and improving wireless operations. During the third quarter, the company added a record 769,000 consumer and business Internet connections, comprising 442,000 fiber and 327,000 fixed wireless connections. It also gained 379,000 postpaid phone subscribers, while postpaid phone churn stood at 0.92%.
The company's Advanced Connectivity segment generated $29.48 billion in revenues, up 7.2% year over year. Service revenues increased 6.1% to $23.9 billion, supported by higher wireless subscriptions and broadband demand. Advanced home Internet revenues jumped 23.4% to $2.98 billion, reflecting customer additions and contributions from the acquired Lumen fiber business.
AT&T is also making steady progress in its convergence strategy, which focuses on providing wireless and broadband services to the same households. The advanced home Internet convergence rate improved to 42.8% from 42.5% in the preceding quarter. Its converged customer base expanded by approximately 350,000 during the third quarter. Such bundled relationships can strengthen customer loyalty and support recurring service revenues over time.
The acquisition of Lumen's mass-market fiber business and continued infrastructure deployment have strengthened AT&T's broadband footprint. The company reached approximately 39.7 million fiber locations by the end of the third quarter. It remains on track to surpass 40 million locations by the end of 2026 and more than 60 million by 2030. A larger fiber network offers opportunities to attract broadband subscribers and cross-sell wireless services.
AT&T's enterprise connectivity business is another growth avenue. Business fiber and advanced connectivity revenues increased 8.7% year over year to $1.99 billion in the third quarter. Growing demand for high-capacity networks, particularly from data centers and AI-related applications, could support future opportunities. AT&T's fiber infrastructure is positioned close to a substantial portion of U.S. data centers, while its connectivity relationships with AWS and Microsoft strengthen its exposure to this market.
Major Challenges for T
Despite solid growth in fiber and wireless services, intense competition remains a concern. It faces competition from major players such as Verizon, T-Mobile. AT&T operates in a saturated U.S. wireless market, where aggressive promotions and discounted service plans can limit pricing flexibility. Although wireless service revenues grew 5% in the third quarter, promotional incentives partially offset the benefits of subscriber growth and pricing actions.
Introductory broadband pricing is also affecting revenue generation per customer. Fiber average revenue per user declined 4% year over year during the third quarter as discounted plans, convergence benefits and lower-priced customers from the acquired Lumen operations weighed on the metric. Persistent pricing pressure could constrain revenue growth and profitability despite higher subscriber additions.
The continued contraction of the Legacy business presents another challenge. Segment revenues declined 24.5% year over year to $1.52 billion in the third quarter, while EBITDA fell 26.7% to $498 million. AT&T expects Legacy service revenues to decline more than 20% in 2026 and become immaterial by the end of 2029. Although network retirement should eventually lower operating costs, the transition is expected to weigh on segment earnings in the interim.
The company's elevated debt burden is also a significant concern. AT&T ended the third quarter with net debt of $149.8 billion, up from $126.4 billion in the previous quarter, primarily due to its $23 billion spectrum acquisition from EchoStar. Its net debt-to-adjusted EBITDA ratio increased to 3.13 times from 2.68 times sequentially.
Moreover, substantial infrastructure spending, customer acquisition expenses and shareholder distributions continue to compete for available cash. AT&T anticipates capital investment of $23-$24 billion in 2026 and $22-$23 billion annually in 2027 and 2028. Higher interest expenses and the ongoing requirement to invest in fiber and wireless capacity could limit near-term financial flexibility.
Estimate Revision of T
Earnings estimates for AT&T have moved up 2.14% to $2.39 and declined 0.4% to $2.56, respectively, for fiscal 2026 and fiscal 2027, over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company's shares currently trade at 8.62 forward earnings, lower than 23.49 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T's expanding fiber footprint, improving wireless customer additions and growing converged subscriber base provide a favorable foundation for long-term growth. Its business connectivity opportunities, efficiency initiatives and improving adjusted profitability are encouraging. The raised earnings outlook and multiyear free cash flow targets further support its investment prospects.
Nevertheless, competitive promotional activity, declining fiber revenue per customer and continued erosion in legacy services remain headwinds. The sharp increase in debt following the EchoStar spectrum acquisition and substantial capital commitments also constrain financial flexibility. With a Zacks Rank #3 (Hold), AT&T offers a relatively balanced outlook, suggesting that new investors should approach the stock cautiously. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.