AT&T’s cash flow in focus during Q3 earnings
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AT&T (NYSE:T) investors will majorly watch out for cash flow when the U.S. wireless carrier reports its third quarter results on Thursday before markets open.
While, the Dallas, Texas-based telecom giant was confident in its ability to hit $16 billion in free cash flow for 2023 and laid out its cost-savings plan, analysts said that AT&T on average should bring in $5 billion for Q3 and Q4 each in FCF to meet its target.
"To reach the FY2023 target of $16 billion FCF, AT&T will have to stretch quite a bit to reach the remaining $11 billion in Q3 and Q4," pointed out a recent Seeking Alpha analysis by Tradevestor.
"I don't expect that to move the stock upwards unless the beats are by wider than recent margins," the analyst added.
Wall Street expects AT&T to post earnings per share (EPS) of $0.62, implying a y-o-y fall of 8.8%, while revenue is expected to rise marginally to $30.24 billion.
Executives are also expected to comment on the recent issue related to lead cable, which according to analysts could weigh on the company's shares.
A WSJ report in July said that telecom operators still had lead-clad cables in their networks. According to the report, AT&T faces the biggest risk with the most cable in the ground, followed by Verizon (VZ).
The issue has sparked concerns on Wall Street over the impact on the telecom firms, with AT&T being downgraded by J.P. Morgan.
âThis is still an incalculable risk, and investors should be aware of the potentially devastating consequences,â read another Seeking Alpha analysis.
Over the last two years, AT&T has beaten EPS estimates 100% of the time and has beaten revenue estimates 38% of the time.
Seeking Alpha and Wall Street analysts are bullish on the stock, rating it a Buy, while Seeking Alphaâs Quant rating consider it a Hold, with a score of 3.43.
AT&T, which has a market valuation of more than $100 billion, has lost 23% so far this year. Rival Verizon has also lost nearly 23%, while T-Mobile (TMUS) stock showed a gain of just 0.8%.

Over the last three months, EPS estimates have seen five upward revisions, compared to seven downward revisions. Revenue estimates have seen four upward revisions versus eight downward moves. 


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