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Hype Asset of the Day | August 3rd, 2022



AT&T (NYSE:T)

AT&T Inc. is an American multinational telecommunications holding company that has its headquarters in downtown Dallas, Texas. It is one of the world's biggest telecommunications companies and is currently the largest provider of mobile telephone services in the U.S. Having recently released its quarterly report, the company has seen an increase in mentions by 100% prompting investors to wonder if this stock is a good investment. Currently shares of AT&T trade at $18.40 per share.



Positive Hype

AT&T is a company with solid foundations in the telecommunications space and has lots of reasons that may generate positive hype. Here are some of them.


  • AT&T added a better-than-expected 813,000 net postpaid phone customers in the second quarter, which translates into lots of revenue for the company.


  • AT&T also added 196,000 prepaid phone customers. AT&T Fiber gained 316,000 net subscribers during the quarter, representing the segment's tenth consecutive quarter of more than 200,000 net adds.


  • AT&T then raised the full-year revenue forecast for its wireless segment from "3% or better" growth to 4.5%-5% growth.


  • In turn, AT&T's revenue, adjusted to exclude recently divested businesses such as WarnerMedia, increased 2.2% to $29.6 billion.


  • The company's operating income came in at an adjusted $5.9 billion, up 4% from $5.7 billion in the year-ago quarter when accounting for the divestitures.


  • AT&T's adjusted earnings from continuing operations rose by a penny year over year to $0.65 per share, which also cleared Wall Street's bar by three cents.


  • The company also offers a fair dividend which makes it desirable to have during a bear market. It offers a $1.11-per-share annual dividend yielding around 5.8% which is well above the S&P 500 average of 1.6%. With a payout ratio of 43%, AT&T has plenty of room to still cover the payment and grow the dividend.


  • On the Q2 2022 earnings call, CFO Pascal Desroches said lower device payments and capital expenditures would allow free cash flow to rise to $10 billion for the second half of the year, more than double the $4.2 billion in the first half.

Negative Hype

Not all investments are all good, and it is incredibly important to consider the bad news and downsides to making an investment before you take a position. Here is one of the drawbacks causing AT&T to gain negative hype too.



  • Its operating margin fell 50 basis points year over year to 31.2%, while its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin declined 110 basis points to 41.3%. This, however, is one of the only financial downsides.

Conclusion

AT&T seems to be doing very well for itself this year in terms of financials, and new subscribers and comes at a steal for less than eight times earnings. However, there are short-term issues and the company doesn’t fare as well as its competitors in all aspects at the moment. Regardless, given that it’s a safe dividend stock and has a positive outlook for the future, it might be worth considering a position in AT&T.





HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.




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