On the eve of the J.P. Morgan Global Technology, Media and Communications Conference, AT&T (T) reaffirmed its performance outlook for the current quarter, 2026, and the longer term, while maintaining a positive view on wireless business growth and profitability improvement prospects.
AT&T expects second-quarter free cash flow to reach $4.0 billion to $4.5 billion, generally in line with market expectations of $4.48 billion. At the same time, the company still anticipates continued growth in consolidated adjusted EBITDA and wireless service revenue. Over the long term, AT&T expects further improvements in the growth rates of adjusted EBITDA and adjusted earnings per share in the coming years. The company also plans to return more than $45 billion in aggregate to shareholders through dividends and share buybacks between 2026 and 2028.
AT&T expects that after completing its transaction with EchoStar, its net debt to adjusted EBITDA ratio will return to the target range of approximately 2.5 times within about three years. In terms of network construction, the company remains on track to cover more than 60 million customer locations with fiber optic network by the end of 2030. Analysts point out that as competition in the U.S. telecommunications industry stabilizes, AT&T is focusing on driving wireless business and fiber broadband expansion, while enhancing shareholder returns through sustained improvement in cash flow and balance sheet strength. Boosted by these developments, AT&T’s stock rose approximately 1.7% against the market trend on Tuesday.
AT&T’s stock has fallen slightly by 3.1% over the past six months, underperforming the S&P 500’s 11.5% gain during the same period. Does AT&T present a buying opportunity, or does it carry risk? For now, it may be wise to remain on the sidelines.
First, revenue has been declining. AT&T’s sales have fallen at an annual rate of 1.3% over the past five years, indicating difficulty in sustaining demand creation and reflecting a lower-quality business. Second, earnings per share are on a downward trend. Over the past five years, AT&T’s earnings per share have decreased by 7.5% annually, a decline greater than that of revenue, reflecting a fixed cost base that makes it difficult to adapt to shrinking demand. Third, free cash flow forecasts are disappointing. Analyst consensus estimates suggest that AT&T’s free cash flow margin of 13.7% over the past 12 months is expected to remain unchanged.
