AT&T Analysis Snapshot
Executive Summery
AT&T does not meet our superior Financial standard. AT&T’s Liquidity & Solvency is mediocre increase the chance of bankruptcy. This is a big concern for us. Although, it is often common to see mediocre Liquidity and/or Solvency in Telecommunication industry since the industry is very capital intensive.
AT&T meets our profit sharing standard although we have some concern for future. Free Cashflow CAGR is 6% which is good but we are sceptical due to their flat revenue. Unless they manage to grow their revenue, their FCF growth may slow down. If FCF growth slows down, AT&T may have to cut their dividend and/or buyback programs. Negative buyback yield is due to large accusation which is OK.
AT&T’s meets our Valuation standard. According to DDM method, AT&T is overvalued but we put more weight on DCF model. AT&T price has a good margin of safety.
Financial Strength
5.88%
Earning
6%
Growth
OK
Liquidity
OK
Solvency
Profit Sharing
37 Y
History
55%
Payout
1.2%
Growth
0.98
Buyback
Valuation
$35
DCF
$22
DDM
$51
Graham
1.5
Peter
Risk&Reward
70%
Upside
15%
Downside