AT&T Inc. (NYSE:T) has a reputation as the redheaded stepchild of the telecom industry, but is that a thing of the past? Some analysts say yes, as the company continues to diversify in an attempt to grow revenue and add subscribers to its ever-expanding platforms.
AT&T posted last week for Q4 2014, and after a quick pullback, T stock is headed back in the right direction. For several reasons, it’s a good bet that T will keep heading higher in 2015:
A Pipeline of New Customers: More and more telecom companies are making an effort to capitalize on every aspect of the digital market, including voice, data, wireless and television. To this effect, last year the company completed its deal to (the parent of Cricket Wireless), a well-known player in the wireless game.
The company to buy DirecTV (NASDAQ:DTV), which will add 20 million pay-TV subscribers to its 6 million U-verse video subscribers — effectively tripling its television subscriber base. U-verse, a mix of IPTV, IP phone and internet broadband, is also expected to grow organically to boot.
These acquisitions and others — including the — put AT&T in position to be at the forefront of the wireless-data-TV trifecta that many telecoms, including competitor Verizon Communications Inc. (NYSE:
VZ), are scrambling to be a part of.
Forward-Thinking Moves Should Position the Company for Growth: AT&T is taking care to focus on infrastructure and technological innovation. is a $14 billion investment that will allow T to continue to expand its 4G LTE network, the latest wave in mobile data connectivity.
And , his company’s connection to DirecTV will also enable it to provide over-the-top video or packaged content to smartphones and tablets. Traditional TV revenue streams admittedly has its challenges, but clearly AT&T is thinking outside the box to drive future shareholder value.
AT&T Continues to Impress Wall Street: to “sector perform” from “sector underperform” after the release of Q4 2014 numbers. Although Scotiabank’s price target was lowered from $36 to $35, this still is a potential upside of 7% from the stock’s current price — a decent clip for a typically sleepy stock like AT&T.
T’s Q4 revenue came in at $34.4 billion, exceeding analysts’ estimates of $34.3 billion. Meanwhile, the company’s earnings came in at 55 cents per share for Q4 2014, up 2 cents year-over-year and a penny better than the consensus mark.
AT&T’s Dividend Can’t Be Beat: AT&T’s $1.88 annual payout comes out to a dividend yield of 5.7%, making it one of the best-yielding blue chips in town. In fact, the in Dividend Channel’s DividendRank report. By way of comparison, the average stock in the Dow yields 2.6%.
Bottom Line
AT&T is positioning itself for growth through acquisitions of wireless service providers and satellite television interest, which should place T in a better position to improve throughout 2015.
As of this writing, Will Emerson did not hold a position in any of the aforementioned securities.
