AT&T underperforms in 2024 earnings forecast

AT&T (T) announced its fourth-quarter earnings early Wednesday. Its earnings fell short of Wall Street estimates although its revenue exceeded expectations. Consequently, T stock dropped as the AT&T earnings forecast for 2024 was below target.

The AT&T earnings for the December quarter dropped by 11% to 54 cents on an adjusted basis. Meanwhile, revenue from continuing operations increased by 2.2% to $32 billion.
According to FactSet, analysts had anticipated AT&T earnings of 56 cents a share on revenue of $31.5 billion. In the same quarter a year earlier, AT&T had earned 61 cents a share on revenue of $31.3 billion.
AT&T Stock: Free Cash Flow Exceeds Expectations
AT&T reported a Q4 free cash flow of $6.4 billion, surpassing estimates of $6.07 billion. The growth in free cash flow reinforces AT&T’s dividend.
The company added 526,000 postpaid wireless phone customers during the quarter, beating estimates even though it was lower than the 656,000 additions in the same period the previous year.
According to FactSet, analysts had projected a gain of 494,000 postpaid phone subscribers—customers with the highest monthly bills.
Verizon Communications (VZ) reported better-than-expected wireless subscriber growth on Tuesday.
T Stock: 2024 Outlook
For 2024, AT&T forecasted an adjusted EPS within the range of $2.15 to $2.25, compared to the consensus estimates of $2.46. AT&T stated that its profit outlook takes into account 17 cents in higher, 7 cents in lower other income due to declines in non-cash prior service credit amortization included in pension and postretirement benefits costs, 5 cents in lower capitalized interest and 3 cents in lower adjusted equity income.
Craig Moffett, analyst at MoffettNathanson, has expressed caution regarding AT&T’s 2024 outlook.
“In their commentary, management spoke reassuringly about their expectations for a stable competitive environment, bolstered by what they expect will have been a solid fourth quarter for all of the Big Three (wireless firms),” Moffett said. “Perhaps so, but we remain concerned that aggregate expectations for the industry enter 2024 at an unachievable level—consensus points to something like 7.5 million postpaid phone net additions in an industry unlikely to deliver more than 6 million or so.”
On the stock market today, T stock dropped nearly 3% to close at 16.68. The telecom stock had risen 2.4% so far in 2024. T stock fell 9% in 2023.
Before the AT&T earnings report, its shares had a Relative Strength Rating of only 53 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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