Tuesday, April 10, 2012

AT&T (T) 2012 Review

AT&T (T) is one of the world’s largest telecommunications companies.

The company has grown profits and dividends at a 5% pace over the past five years earning approximately 10-12% return on equity. T has been through a rough period as the growth of its traditional wireline business slowed and margins came under pressure. Looking forward profits should regain momentum as a result of:

(1) expansion of its wireless business via expanding broadband and smartphone usage,

(2) building the most technologically advanced digital networks systems in the industry. It will include voice, video and internet in a vast wireline (U-verse) and wireless infrastructure and has resulted in increased penetration of both the business and household markets,

(1) rising network upgrade costs as well as handset subsidies are adversely impacting margins,

(2) a shift is occurring among smartphone subscribers to cheaper, lower end monthly data plans.

T is rated A+ by Value Line, carries a 26% debt to equity ratio and its stock yields 6.1%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
T 6.1% 4% 69% 9
IND 4.6 6 59 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
T 26% 12% 4 12% A+
IND 62 14 NA 11 NA


Note: T stock made great progress off its March 2009 low, quickly surpassing the downtrend off its May 2008 high (red line) and the November 2008 trading high (green line). Long term the stock is in a trading range (boundaries not visible). Intermediate term, it is an uptrend (purple lines); it is also in a short term uptrend (brown lines). The wiggly blue line is on balance volume. The High Yield Portfolio owns a full position in T. The upper boundary of its Buy Value Range is $13; the lower boundary of its Sell Half Range is $33.


Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.