AT&T: Expect Bumpy Results To Send Yield Higher
Oct. 6.16 | About: AT&T Inc. (T)- Stone Fox Capital
AT&T isn't fulfilling a lot of the synergy promises of the DirecTV merger, especially on the sales side.
The dividend yield has consistently traded at higher levels over the last five years. .
The CEO sending signals that big media deals are on the horizon aren't positive for the stock in the short term. .
By all indications, AT&T (NYSE:T) still remains under pressure in the domestic wireless segment. Early signs suggest that Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) are aggressively adding iPhone 7 customers to the detriment of the incumbents.
Partly due to this concern, AT&T has dipped back below $40 providing a solid dividend yield of 4.8%. Will the upcoming Q3 results provide a catalyst for the stock?
DirecTV Not Helping
The biggest disappointment with AT&T is that the DirecTV merger was suppose to provide synergies to drive earnings higher partly from selling a bundle of wireless, TV, and broadband. In reality, the large wireless provider only expects flat Q3 earnings from last year as sales sputter.
Analysts are still projecting that results improve with Q4 and into 2017. The step up to an EPS above $3 next year requires that the domestic wireless market improves and that the company stems the losses already seen in the pay-TV segment as highlighted in my last article. Neither of these scenarios appear in the offing.
As the Estimize chart shows, the actual EPS numbers in green peaked last Q3 and results continue to struggle as the integration benefits from DirecTV stall.