AT&T Earnings Preview: First Quarter 2009

AT&T [[T]] is scheduled to report their first quarter 2009 results before the market opens on Wednesday, April 22. Based on our analysis, we at are expecting AT&T to report disappointing results that miss Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $31.09 billion and EPS of $.47. This would represent a 1% increase in revenues from last year’s $30.74 billion in the same period. The current analyst consensus estimates calls for revenues of $31.14 billion and $.48 EPS. In January, the company provided full year 2009 guidance for “consolidated revenue growth in the low single-digit range” and “stable reported consolidated earnings”.


AT&T surprised investors last quarter by providing 2009 guidance that was significantly below Wall Street’s consensus estimates. While those guidance numbers may reflect a degree of conservatism, the company is clearly seeing some impact from the declining economic environment.


Even with a relatively conservative guidance, the company still expects to grow their business in 2009 and to be able to maintain 2008 EPS levels. That along with a 6.3% dividend yield and continued strong growth from Apple iPhone subscribers could make AT&T one of the Dow’s top performing stocks in 2009.


Share Performance

AT&T’s shares are down over 10% since the beginning of the year, but have climbed 17% since March 9th. In 2008, AT&T’s shares fell over 31%, as it performed relatively inline with the 34% decline in the Dow Jones index.



Shares are now trading at 11x consensus 2010 EPS estimates. This is inline with the relative valuations of their peer group. With an attractive 6.3% dividend yield and reasonable valuation levels, we feel that AT&T could provide investors with a nice return in 2009.


Recommendation: Buy with a $30 price target.


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