After reading AT&T Inc’s (NYSE:T) most recent earnings announcement (31 March 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether AT&T’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for AT&T
Were T’s earnings stronger than its past performances and the industry?
I look at data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze many different companies in a uniform manner using the most relevant data points. For AT&T, its latest earnings (trailing twelve month) is US$30.64B, which compared to the previous year’s level, has climbed up by more than double. Given that these values may be relatively myopic, I’ve created an annualized five-year figure for AT&T’s earnings, which stands at US$12.17B This means on average, AT&T has been able to gradually improve its profits over the last couple of years as well.
What’s the driver of this growth? Let’s see whether it is solely attributable to an industry uplift, or if AT&T has experienced some company-specific growth. Over the past couple of years, AT&T expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US telecom industry has been growing, albeit, at a subdued single-digit rate of 6.30% in the prior year, and 3.50% over the previous five years. This means that whatever uplift the industry is deriving benefit from, AT&T is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While AT&T has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research AT&T to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for T’s future growth? Take a look at our free research report of analyst consensus for T’s outlook.
- Financial Health: Is T’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.