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AT&T, Inc. Message Board

  • dividendseeker dividendseeker Nov 12, 2013 12:17 PM Flag

    Good Valuation

    AT&T has one of the best valuations of the high yeild stocks. It trades at only 13x next years earnings with a 5% yeild. Here is my valuation case for this investment.

    1. P/E: trading at only 13x next years earnings puts it below the market average.

    2. Debt : i prefer to use debt to EBITDA instead of debt to equity to measure a companies ability to pay debt. ATT is at 3.2x where my limit is 4x so its still well below the max. they are taking on a lot of debt the past 2 years taking advantage to low rates to borrow at 2.5% to 3.5% rates and buying back higher rate 6% and higher debt and stock which yeilds 5%. Call it what you like but its wise as long as the debt doesnt go beyond the 4x EBITDA.

    3. Dividend: ATT earned 26.8 bil in operating income, paid out 7.3 in dividends and spent 15.5 billion in capex. This gives them 4 bil in free cash that is plenty of room to raise and pay dividends.

    I like the valuation here. I currently dont own T but i have several buys in starting at 34.50 and working down to 30. I just hope the bears ane kind enough to make some of those buys work out.

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    • Do you proof read what you write? Your very last paragraph sharply contradicts the three seperatao items you discussed.

    • Don't worry - you'll get your orders filled. This stock never goes up anymore. Hasn't hit it's #'s for several quarters now and counting. Earnings do still matter, hence the constant share price erosion.

      • 2 Replies to newbeau287
      • then only a fool would buy at $39

      • I dont see the case for a strong sell on this stock. for earnings they met estimates in Q1, missed by a penny in Q2 and beat by a penny in Q3. That seems pretty inline to me. For revenues they earned little over 95 bil for the first 9 months and are projected to earn 33 bil in Q4. that puts them right on track to reach the 128B revenue estimates for 2013. As for as all the whinning about growth, i see revenues of 124B in 2010 and 128B in 2013 that is 3% revenue growth over the past 3 years. Next years revenues are estimated at 130B. i keep seeing revenue growth in this company. Yes, 1% a year might not be awesome but when your working off of a 124B base its good especially when you consider this is a cash machine of a company with a very nice yeild.

    • Take a look at the chart:;range=1y;compare=;indicator=sma(50,10,200)+bollinger+volume+stochasticslow;charttype=candlestick;crosshair=on;ohlcvalues=1;logscale=off;source=undefined;
      I think it indicates that you are not likely to get a fill at $34.50 unless T reverses the up trend that it has been on for a month. If that trend is reversed, you won't want to buy. T is up today even though the market is down. It looks to me like right now is a buying opportunity that we are not likely to see again for several months. JMHO

      • 2 Replies to wilkes71
      • "It looks to me like right now is a buying opportunity that we are not likely to see again for several months."

        well then I guess this is going much lower very soon.

        Sentiment: Strong Sell

      • I appreciate you technical analysis but im looking at the fact that on Oct 8 T bottomed at 33.11 and ran stratight to 36.54. since then it has pulled back. Its 50 day moving average is 34.53 which is right where my first bid is placed. and i can spread some out back down to that 33.11 level. Obviously i will only buy about 60% of my position and wait with the rest to see if we can get a read good blood bath of a correction like in November of last year to pick up the rest.

    • Divseek -- As you correctly point out, T is a good deal "as is". Why play market timing games? Best idea is to $cost average before the January dividend increase.

40.73-0.12(-0.29%)1:11 PMEDT