AT&T Inc. is down about 10% over the past year. It is one of the top stock picks in President Donald Trump’s latest stock portfolio. Let’s see whether the stock can rebound.
Bull Case
AT&T keeps customers longer when they bundle its fiber internet with its wireless service, and 42.5% of its advanced home internet customers already take both. Management says these customers stay longer and spend more, and it targets a 50% rate. The company plans to reach more than 60 million fiber locations by 2030. Its purchase of Lumen’s consumer fiber business added more than 4 million locations where only about 25% of homes are customers, against about 40% in AT&T’s own footprint. Management explained why bundled customers stay longer on its first-quarter earnings call. Click to read the call transcript here. AT&T is also retiring its copper network to cut costs and raised its 2026 buyback plan.
Bear Case
AT&T spends heavily to build fiber, and its debt is rising. After the EchoStar spectrum purchase, management expects leverage to climb from 2.68 times EBITDA to about 3.2 times before it falls back. Satellite companies are the larger worry, and they explain much of the drop in the stock. SpaceX and Amazon’s Leo are pushing into broadband and mobile service, and Oppenheimer downgraded AT&T in June, saying satellite broadband puts its subscriber growth at risk. Carillon Eagle Growth & Income Fund said in its investor letter that AT&T lagged because investors fear a new competitor. Click to read their reasons here. Higher interest rates also make the dividend less attractive and raise debt costs, and AT&T has held its quarterly dividend flat since 2022.
Valuation
AT&T trades at a forward P/E of 10.02, below the sector median of 12.75 and the market’s 19.1, and just above its own five-year average of 9.19. Analyst consensus has earnings per share growing 10.31% in 2026 and 9.92% in 2027, close to the market’s long-run rate of about 10%. Revenue is forecast to grow only 2.83% and 2.23%, so cost cuts, lower depreciation and buybacks drive the earnings growth. Management guides to double-digit adjusted EPS growth through 2028. Growth slows in the fourth quarter, with analysts expecting just 1.58%, partly because interest costs rise after the EchoStar deal. Buyers at this price are betting that earnings keep growing near 10% a year while revenue grows 2% to 3%. If cost savings stall or competition forces price cuts, growth falls toward revenue growth and a multiple near 10 looks fair.
Should You Buy Before Earnings?
Buying before earnings is a bet on one report, and the setup is mixed. AT&T reports on Oct 21. Analysts expect earnings per share to rise 11.71% from a year ago, and AT&T has beaten estimates in each of the last four quarters. The shares fell after the third quarter report a year ago despite strong results, and they react sharply to satellite news. Investors who like the low multiple and the yield of about 4.74% can buy in steps, with part before the report and part after. Investors who want less risk can wait for the report and for any buyback update. We also looked at two other stocks Trump bought in July that are now down 17% to 20%. Click to read whether they are worth buying. Buying AT&T Inc. in steps is one way to manage that risk.
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