AT&T Inc. (Ticker Symbol: T) is an American multinational conglomerate holding company. It is the world’s largest telecommunications company, the largest provider of mobile telephone services, and the largest provider of fixed telephone services in the United States. This week, I fundamentally analyze AT&T’s stock. I review AT&T’s operating segments, key ratios, derive the intrinsic value using Discounted Cash Flow (DCF) analysis, and look at expected rate of return from this investment. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Earnings per Share, Book Value, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc. I also compare the AT&T’s current valuation to that of S&P 500.
After taking into account Trailing Twelve Month’s (TTM) free cash flow of $28,116 million figure, a 3% growth rate of FCF (growth for the next 10 years), 10% discount rate, 2% long term growth rate (growth from 10 year mark to perpetuity), 7,225 million shares outstanding, and $149,437 million of long term debt, the DCF analysis yields us an intrinsic value of $30.98 per share. Using the current stock price of about $29 per share, and taking into the shares outstanding and future projects of free cash flows, we get the expected rate of return of 11.5% if we hold this security through 2033.
Timestamp
0:00 Introduction
0:39 Operating Segments
4:18 Key Ratios Analysis
14:38 Discounted Cash Flow Analysis / Intrinsic Value
16:46 Expected Rate of Return Calculation
17:46 Summary / Conclusion
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References:
AT&T’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
AT&T is an American multinational conglomerate holding company, Delaware-registered but headquartered at Whitacre Tower in Downtown Dallas, Texas.
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