NEW YORK (TheStreet) -- AT&T (T - Get Report) stock is gaining by 1.75% to $32.63 in mid-morning trading on Wednesday, after the company said it expects to add more than 2 million wireless consumer and business subscribers in the third quarter.
The telecommunications company expects to see an increase in net additions in every customer category, such as prepaid, postpaid and reseller.
AT&T warned its U-verse TV subscribers declined because the company is focusing on satellite services after acquiring DirecTV in July.
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DirecTV subscribers are expected to fall by 918,600 due to a reporting methodology change that will count commercial subscribers as one, instead of an equivalent number of residential subscribers.
AT&T also expects to see a sales boost from the expansion of 4G LTE in Mexico and plans to continue its Latin American satellite projects.
The company is schedule to report its third quarter earnings results on October 22.
Separately, TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate AT&T INC (T) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
◾T's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
◾Net operating cash flow has increased to $9,160.00 million or 13.50% when compared to the same quarter last year. In addition, AT&T INC has also modestly surpassed the industry average cash flow growth rate of 3.72%.
◾The gross profit margin for AT&T INC is rather high; currently it is at 54.14%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.22% trails the industry average.
◾Even though the current debt-to-equity ratio is 1.31, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
◾AT&T INC's earnings per share declined by 14.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.19 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $1.19).
AT&T (NYSE:T), which holds a meeting with sell-side analysts tonight, preannounced Q3 wireless subscriber additions and forecast free cash flow above analyst estimates.
AT&T was up nearly 1% in early trading in the stock market today as the overall market looked to rebound on the last day of a rough quarter.
AT&T's analyst meeting will not be webcast. At its investor day Aug. 12, the company updated its full-year guidance, including the acquisition of satellite TV broadcaster DirecTV. AT&T reports Q3 earnings on Oct. 22, two days after Verizon Communications (NYSE:VZ) kicks off telecom earnings.
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DirecTV's free cash flow — net cash generated by operations, minus capital expenses — is expected to help sustain AT&T's dividend. For Q3, AT&T said it expects FCF to exceed $4.5 billion. It reiterated full-year earnings guidance in a range of $2.62 to $2.68 per share, at the midpoint up 5.6% from $2.51 last year.
"While the reiterated EPS guidance includes some DirecTV Latin America currency pressure, AT&T has seemingly yet to take an impairment on the DTV Brazil and Venezuela operations, both of which faced meaningful (currency) pressure in the quarter," Jefferies analyst Mike McCormack said in a research note.
"FCF guidance of $4.5 billion or greater is likely somewhat softer than our estimate of $3.95 billion, which when adjusted to match the quarter's $980 million (wireless) equipment factoring benefit would have resulted in around $4.77 billion of FCF," McCormack said. "The FCF guide is still above street estimates of $4.4 billion."
AT&T expects Q3 capital spending to be above Q2's $4.7 billion.
For Q3, AT&T said it expects to report more than 2 million net subscriber additions, but the company didn't break out phone users. In Q2, most subscriber gains came from Internet-connected cars, tablets users and other devices.
T-Mobile US (NYSE:TMUS) has been gaining share in smartphone users with its Uncarrier promotions.
The board of directors of AT&T Inc. (NYSE:T) today declared a quarterly dividend of $0.47 a share on the company’s common shares. The dividend is payable on November 2, 2015, to stockholders of record at the close of business on October 9, 2015.
AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
NEW YORK, Sept. 3, 2015 /PRNewswire/ -- The Board of Directors of Verizon Communications Inc. (NYSE, Nasdaq: VZ) today declared a quarterly dividend of 56.5 cents per outstanding share, an increase of 1.5 cents per share, or 2.7 percent, from the previous quarter. On an annual basis, this increases Verizon's dividend by 6 cents per share, from $2.20 to $2.26 per share.
The quarterly dividend is payable on Nov. 2, 2015, to Verizon Communications shareowners of record at the close of business on Oct. 9, 2015.
This is the ninth consecutive year Verizon's Board of Directors has approved a quarterly dividend increase.
Thank you, VZ.
L.A. Times headline:
"AT&T gets FCC approval, immediately completes $49-billion takeover of DirecTV"