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What to Expect from AT&T's (T) Q1 2019 Earnings Results

Benjamin Rains

Shares of AT&T T are still down roughly 11% over the last year, despite a double-digit surge to start 2019. Now the question is what should investors expect the from the telecommunications and entertainment giant’s first quarter 2019 financial results that are due out on Wednesday, April 24?


AT&T has seen its stock price climb this year as part of the larger market comeback, driven by the likes of Apple AAPL and other tech giants. Yet, some of the AT&T-specific positivity likely stems from the fact that the U.S. Justice Department ended its attempts to stop the AT&T-Time Warner deal from being completed. A federal appeals court in late February rejected the government’s bid to curb or stop the planned merger on the basis of antitrust concerns, noting that the joint company was unlikely to harm consumers.

Now, with its roughly $85 billion merger officially in the clear, AT&T can solely focus on figuring out how to best integrate Time Warner and its array of assets that include WarnerMedia’s HBO, Turner, and Warner Bros. The company clearly hopes to be able to compete in a streaming entertainment age alongside Netflix NFLX, Amazon Prime AMZN, Disney DIS, Apple, Comcast CMCSA, and others.

Meanwhile, AT&T is coming off a fourth quarter of 2018 that saw its quarterly revenue surge 15.2% to $48 billion, driven, in larger part, by its Time Warner acquisition. With that said, the company’s wireless-heavy mobility business was still the largest source of revenue, accounting for nearly 40% of Q4 revenue.

AT&T also boasts enterprise-level telecom offerings, along with internet services, DIRECTV and U-Verse cable, and more. “In 2018, we generated record free cash flow while investing at near-record levels. Our dividend payout as a percent of free cash flow was 46% for the quarter and 60% for the year, allowing us to increase the dividend for the 35th consecutive year,” AT&T CEO Randall Stephenson said in a statement.

“This momentum will carry us into 2019 allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.”



Outlook & Earnings Trends

Looking ahead, AT&T’s Q1 revenue is projected to climb 18.5% to reach $45.07 billion, based on our current Zacks Consensus Estimate. Clearly, the Time Warner deal is set to boost the top line. And the firm’s full-year 2019 revenue is expected to jump 7.7% to hit $183.81 billion. Peaking even further ahead, however, the company’s fiscal 2020 revenue is projected to pop just 0.84% above our current year estimate, as the comparison periods become normalized.

Moving onto the bottom end of the income statement, AT&T is projected to see its adjusted first-quarter 2019 earnings come in flat from the year-ago period at $0.85 per share. Meanwhile, the company’s full-year EPS figure is projected to pop roughly 2%.

Investors will also notice that the company’s earnings estimate revision activity has trended more heavily in the wrong direction recently, especially for Q1. This means at least some analysts are less bullish on AT&T’s bottom-line outlook than they were not too long ago.



Bottom Line

AT&T is currently a Zacks Ranks #3 (Hold) and has a mixed history of earnings beats over the trailing four periods. And we already saw that AT&T stock has outpaced its peer group over the last five years, which includes T-Mobile US TMUS, Sprint S, and others.  

With that said, shares of T closed regular trading Tuesday down 0.41% to $31.75 a share, which marked a roughly 13% downturn from their 52-week high. AT&T is scheduled to announce its first-quarter 2019 financial results before the market opens on Wednesday, April 24. Make sure to head back to Zacks for a breakdown of the company’s actual quarterly metrics.

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