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AT&T (NYSE:T) is set to release its 1st quarter 2013 earnings on Tuesday, April 23rd at 4:30 pm ET. Below I have provided an update of the quarter as well as an overview of earnings expectations.

Profile and Estimates

AT&T has a market cap of $207.47 billion and currently trades for $37.80 per share. Shares are up 14.87% YTD and trade 29.69% above their 52-week low of $29.15. Analysts have a mean target price of $36.80 and a median price target of $37.00 on the shares. Twenty six analysts have an average first quarter earnings per share estimate of $0.64 on estimated revenues of $31.75 billion. AT&T missed earnings expectations last quarter after beating estimates in the previous three.

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Fundamentals and Highlights (Sources cited below article)

Positives

  • 4.71% dividend yield.
  • After repurchasing approximately 6% of the shares outstanding in 2012, AT&T's board recently authorized the repurchase of an additional 300 million shares (bringing total shares authorized for repurchase up to 529 million).
  • P/E of 30.2 and D/E of 0.7 are both below the industry averages 40.8 and 0.8 respectively.
  • Net margin of 5.7% and ROE of 7.3 are both above the industry averages 3.5% and 5.3 respectively.
  • Bundled packages of diverse media products allows AT&T to provide a one-stop solution for customers.

Negatives

  • Like Verizon, AT&T's fixed line business has been declining as customers switch to alternative technologies.
  • Loss of exclusivity of iPhone sales as well as high subsidies paid to Apple continue to pressure margins.
  • Expensive network upgrades.
  • P/B of 2.2 and P/S of 1.7 are both above the industry averages 1.8 and 1.1 respectively.

Mixed

  • AT&T has been continuously linked with Verizon (NYSE:VZ) in a bid to purchase Vodafone (NASDAQ:VOD). I am undecided on whether or not this is a positive or a negative for AT&T because I have a hard time seeing how much this acquisition would add to AT&T's current operations as well as what price the deal would ultimately be for. In my opinion, Vodafone has all the power because of its 45% stake in Verizon. Verizon has been wanting to repurchase this position, for which it pays over $6 billion in dividends annually, for some time and Vodafone could use this to push up the purchase price (luckily, AT&T could just walk away).

Take Away

Shares trade near their 52-week highs and I believe share repurchases and the high dividend yield will continue to hold them at or near their current levels. This earnings release comes after Verizon already posted positive results and I feel a similarly strong report is needed to push shares up above their current valuation.

Sources

In addition to the links above, ratios and financial data was sourced from Morningstar.com, which you can find here.

Other company data was sourced from the annual report that can be accessed here.

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Source: Will AT&T Beat Verizon's 1st Quarter Results? Highlights And Earnings Expectations