Zacks Investment Research

The Zacks Computer and Technology sector has been hit hard in 2022 amid a Fed pivot to a hawkish nature, with geopolitical issues and lingering COVID-19 uncertainties also driving poor share performances.

AT&T T, a company residing in the realm, is on deck to unveil quarterly results on October 20th before market open.

AT&T is North America’s second-largest wireless service provider and one of the world’s leading communications service carriers.

Currently, the communications titan carries a Zacks Rank #3 (Hold) with an overall VGM Score of a B.

Let’s take a deeper dive into how it currently stacks up.

Share Performance & Valuation

Year-to-date, T shares have held up better than the general market, down 12% vs. the S&P 500’s decline of more than 20%.

Image Source: Zacks Investment Research

However, over the last three months, the story has changed visibly; AT&T shares are down more than 23%, widely lagging behind the S&P 500’s 7% decline.

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Image Source: Zacks Investment Research

While T shares have displayed more strength overall in 2022, the recent price action is undoubtedly a factor to consider.

AT&T shares trade at a cheap 6.1X forward earnings multiple, well beneath the 9.1X five-year median and representing a sizable 64% discount relative to the S&P 500.

Further, the company sports a Style Score of an A for Value.

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Image Source: Zacks Investment Research

Quarterly Estimates

Two analysts have upped their earnings outlook for the quarter over the last 60 days, with the Zacks Consensus EPS Estimate of $0.61 suggesting a 30% drop in quarterly earnings Y/Y.

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Image Source: Zacks Investment Research

T’s top-line is also displaying some softening; the Zacks Consensus Sales Estimate of $29.8 billion for the quarter reflects a steep 25% Y/Y drop in revenue.

Quarterly Performance & Market Reactions

AT&T has repeatedly exceeded earnings estimates, surpassing the Zacks Consensus EPS Estimate in seven of its last ten quarters. Just in its latest print, the communications giant registered a solid 8.3% EPS beat.

Revenue has also primarily been positive; AT&T has penciled in six top-line beats over its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

Further, it’s worth noting that the market hasn’t had favorable reactions in response to the company’s quarterly prints, with shares moving downwards following three of its last four releases.

Putting Everything Together

AT&T shares are outperforming the general market overall in 2022, but as of late, they’ve lagged behind by a fair margin.

Valuation multiples aren’t stretched, with the company’s forward P/E ratio sitting well beneath its five-year median.

Two analysts have raised their quarterly earnings outlook, with estimates suggesting sizable Y/Y declines in both revenue and earnings.

Further, the company has primarily exceeded quarterly estimates, but the market has had adverse reactions following the majority of its last four prints.

Heading into the release, AT&T T carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 2.7%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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