Article by Seeking Alpha: How much is the AT&T stock worth
1. The author is correct in saying any stock price is the CDCF of future earnings but the difficult part is what none-uniform discount rate to use for years going out, the higher the rate the lower the resulting sum. Using the discount rate of zero, or close to zero, yields unusually high price for any stock including AT&T of which further validates Professor Jeromey Signore's absurd prediction that the stock prices will shoot to the moon. Unfortunately, at some point and time, rates are going to go up unless you prescribe to the notion that they are going below zero. Try predicting what the LT rates are going to be 5, 10 years from now. Obviously, the mortgage lenders are implying nothing to worry about. We shall see.
2. AT&T is engaged in a massive market expansion to the point that we are at a point to question the safety of the dividend due to the urgent need for additional capital, not at a point, though, to burn the office furniture for heating purposes but getting there.
3. Using the TTM numbers for earnings is likely to yield misleading results since those numbers included the one time $4B contract cancellation penalty.
4. Competition is intensifying in all directions while market growth is coming down. Exactly how? Think about it. The year 2013 started with analyst forecast of $2.59 and now achieving $2.52 is questionable, wont be surprise if they miss on April 23rd or even a frightening case of dividend reduction announcement on April 8th. Surely we can use a set of numbers for future years but our confidence would be rather very weak.
8. Far to many internal, company specific problems of monumental nature. And,
9. Wile the insiders are telegraphing all these glorious future plans, they are busy selling. Only in America!
In conclusion, IMO, at these price levels, the stock price is reflecting all the positives and does NOT make a good investment. I personally would not be a buyer at these prices.