AT&T Inc. Earnings Preview: Solid Growth Expected

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AT&T Inc. (NYSE:T) is scheduled to release its next earnings report after closing bell tonight. On average, analysts are expecting earnings per share of 64 cents on $33.3 billion in revenue. In the same quarter last year, the mobile carrier reported earnings per share of 66 cents on $32.16 billion in revenue, matching analyst estimates exactly.

AT&T’s last quarter

In the previous quarter, AT&T’s results were rather mixed, as its revenues improved 1.6% year over year while EBITDA margins were flat at 42.6%. The company cited a transition to non-subsidy mobile plans, which meant that revenue was shifting from service to handsets.

AT&T also noted that gross adds of bring-your-own-device plans made up a larger proportion of its overall additions. The carrier reported the addition of more than 1 million postpaid subscribers in the last quarter, which is the biggest gain in almost five years and almost double its gains in the second quarter of last year.

What to expect in tonight’s earnings report

In AT&T’s third quarter report, in a post on Forbes, Trefis analysts said they are expecting low to mid-single digit growth in revenue. They cited “robust” adds in mobile postpaid subscribers, low churn and a growing user base for AT&T’s U-verse service. They also expect the company to keep focusing on margins in tonight’s report.

Recently AT&T said it expects to see less than 1% churn for the September quarter. It expects the take rates for its Next plan to be around 50%, which is where they were in the second quarter. The Trefis team notes that this is much higher than Verizon Communications Inc. (NYSE:VZ)’s take rates of 18% for its comparable Edge plans. AT&T also expected that approximately 58% of its total postpaid user base will be on its Mobile Share Value plans in the September quarter.

Trefis analysts have a $38 per share price target on AT&T, which suggests approximately 10% upside to today’s share price.

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