Insiders are showing interest in telecommunication services company AT&T Inc. (T). In the last three months, insiders initiated 34 open market buys and were net buyers of 28,011 shares of the company.

In September, the company declared a quarterly dividend of $0.28 per share on its common shares, which was payable to shareholders on November 1, 2022. Its annual dividend of $1.11 yields 5.87% on the current share price. It has a four-year average yield of 6.8%.

The stock has gained 12.3% over the past year and 12.7% over the past three months to close its last trading session at $18.90. It is trading higher than its 50-day moving average of $17.83 and 200-day moving average of $18.58.

Here are the factors that could influence T’s performance in the upcoming months:

Discounted Valuation

In terms of its forward P/E, T is trading at 7.60x, 56.1% lower than the industry average of 17.31x. The stock’s forward Price/Book multiple of 1.06 is 45.5% lower than the industry average of 1.95. In terms of forward Price/Cash Flow, it is trading at 3.94x, 55.8% lower than the industry average of 8.91x.

Robust Profitability

T’s trailing-12-month EBIT margin, EBITDA margin, and net income margin of 21.31%, 34.13%, and 12.90% are 130.8%, 89.6%, and 186.2% higher than the industry averages of 9.23%, 18%, and 4.51%, respectively.

Its trailing-12-month ROCE, ROTC, and ROTA of 12.23%, 5.98%, and 4.70% are 110.6%, 56.3%, and 110.3% higher than their respective industry averages of 5.81%, 3.83%, and 2.23%.

Impressive Bottom Line

For the fiscal third quarter of 2022, T’s total operating revenues declined 4.1% year-over-year to $30.04 billion. However, income from continuing operations increased 26.4% year-over-year to $6.35 billion. Net income rose 2% from the prior-year quarter to $6.40 billion.

Its free cash flow improved marginally year-over-year to $3.84 billion. Adjusted EPS came in at $0.68, up 3% from the prior-year period, surpassing the consensus estimate by 10.4%.

POWR Ratings Reflect Promising Prospects

T’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. The stock also has a B grade for Value and Quality, consistent with its lower-than-industry valuation multiples and solid profitability.

In the 19-stock Telecom – Domestic industry, it is ranked #5.

Click here to see the additional POWR Ratings for T (Growth, Momentum, Stability, and Sentiment).

View all the top stocks in the Telecom – Domestic industry here.

Bottom Line

Insiders buying the stock reflect their confidence in the company’s growth and earnings. Additionally, its high dividend yield looks attractive amid the current uncertain market conditions. Therefore, the stock might be a solid buy now.

How Does AT&T Inc. (T) Stack up Against Its Peers?

While T has an overall POWR Rating of B, one might consider looking at its industry peers, Spok Holdings, Inc. (SPOK) and Ooma, Inc. (OOMA), which have an overall A (Strong Buy) rating.

T shares fell $0.28 (-1.48%) in premarket trading Thursday. Year-to-date, T has gained 6.94%, versus a -16.07% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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