Key Takeaways
- AT&T beat on revenue and adjusted EPS and raised its 2026 adjusted EPS outlook to about $2.40.
- Internet net adds hit a record 769,000, including 442,000 fiber and 327,000 fixed wireless customers.
- Fiber ARPU fell 4% as bundle discounts bit, and management expects a similar decline in the fourth quarter.
- The AT&T Mexico sale should close in early 2027, while SpaceX’s wireless push remains the longer-term threat.
AT&T (T) had a busy 48 hours. The stock slid after earnings on Wednesday, then jumped 3.8% to $23 on Thursday.
Both moves had the same root. Investors first fixated on a 4% drop in fiber revenue per user, then decided the rest of the quarter was good enough to forgive it.
And the rest was good. Revenue rose 5.3% to $32.3 billion, adjusted EPS climbed 20.4% to $0.65, and consolidated service revenue posted its best growth in more than four years.
CEO John Stankey kept it simple on the call: “Our improved gains in subscribers and converged accounts are driving strong financial results.” marketbeat
The real question is what those converged accounts cost.
Record adds and a higher bar
The beat came across the board:
- Revenue of $32.3 billion topped the roughly $31.7 billion consensus.
- Adjusted EPS of $0.65 beat the $0.60 estimate.
- Free cash flow reached $5.0 billion, up from $4.9 billion a year ago. att
AT&T added a record 769,000 internet customers and 379,000 postpaid phones. It now expects 2026 adjusted EPS of about $2.40, above its prior $2.25 to $2.35 range.
GAAP results looked very different. Diluted EPS fell 90% to $0.13 after a $2.6 billion noncash impairment on AT&T Mexico, which AT&T agreed to sell to Grupo Televisa (TV) and Fintech Holdings for $2 billion.
Here is the earnings path analysts now expect…
Consensus sees EPS growing about 10.6% a year over the next two years, a brisk pace for a telecom.
Bundles buy loyalty at a price
Convergence is the whole strategy. AT&T added about 350,000 converged relationships, and 42.8% of its advanced home internet customers also hold a postpaid wireless line.
Those customers churn less, so AT&T is willing to discount them. Management expects fiber ARPU to fall at a similar rate in Q4 as introductory offers and customers from Lumen Technologies (LUMN) flow through.
The build cost is falling, though. AT&T cut $600 million from network capex through fiber construction efficiencies. It now passes more than 39 million fiber locations and targets 60 million by 2030.
Competition is getting louder. SpaceX (SPCX) is seeking access to 80,000 U.S. cell sites for its own wireless network, which keeps a Starlink overhang on the whole sector.
Discounts hurt ARPU, yet the margin line tells a calmer story.
Adjusted EBITDA reached $12.5 billion this quarter, so the discounting has not dented profitability so far.
TIKR tracks 25 analysts on AT&T. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on AT&T, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See AT&T’s Analyst Ratings
Cheap stock, heavy balance sheet
The valuation looks undemanding. AT&T trades at 9.0x forward earnings and 6.9x forward EV/EBITDA, with a 4.9% dividend yield and a 60.4% payout ratio.
Debt keeps it cheap. Net debt sits near $170 billion, and the deleveraging plan now leans on Mexico proceeds and a new fiber joint venture with Global Infrastructure Partners and CPP Investments.
So has leverage actually come down?
At 3.27x, leverage still sits above where AT&T wants it, so every dollar of Mexico cash matters.
The average price target of $28 implies about 22% upside from Thursday’s close.
My take: I think Thursday’s rebound got it right. Fiber ARPU erosion is a deliberate trade for stickier bundles, and the EPS raise plus $5 billion of quarterly free cash flow show that trade is working for now. The risk sits further out, where a faster ARPU slide or a credible SpaceX network could squeeze a company carrying $170 billion of net debt.
The Q4 report in late January is the next checkpoint. It should confirm about $6 billion of fourth-quarter free cash flow and show whether fiber ARPU stabilizes.
So what is AT&T stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
