The complete analysis of AT&T company, showing its worthiness in buying,holding and selling the share.

1. AT&T

2. SECTOR UPDATE

3. CURRENT POSITION:
TICKER: T
SECTOR: Telecommunication
INDUSTRY: Service
CURRENT PRICE: $36.43
WEIGHT: 1.38%
TARGET PRICE: $59.69
MARKET CAPITAL: 212.901B
RECOMMENDATION:HOLD

4. COMPANY BACKGROUND
Formerly called •Southwestern Bell Corporation
(1983–1995)
•SBC Communications (1995–
2005)
Type Public
Traded as •NYSE:T
•S&P 100 Component
•S&P 500 Component
Industry •Telecommunications
•Mass media
Founded October 5, 1983; 34 years ago
[1]
Headquarters Dallas, Texas, United States
Area served Worldwide
Key people •Randall Stephenson
•(Chairman, CEO and President)

5. PRICE HISTORY
JANUARY 1ST,2017 – NOVEMBER 27TH,2017

6. REVENUE BREAKDOWN
 PIE CHART OF THE REVENUE TABLE
BUSINESS SEGMENTS REVENUE OPERATING INCOME
(in millions) (in millions)
Business solution 70,988.0 16,826.0
International 7,283.0 -713.0
Consumer mobility 33,200.0 9,825.0
Entertainment group 51,295.0 6,095.0
 REVENUE TABLE
44%
4%20%
32%
REVENUE (in millions)
Business solution
International
Consumer
mobility

7. GEOGRAPHICAL REVENUE BREAKDOWN
93%
3%1%3%
REVENUE
UNITED STATES
LATIN AMERICA
MEXICO
OTHER
COUNTRIES
REVENUE
(in millions) PERCENTAGE
UNITED STATES 154,039 94.0
LATIN AMERICA 5,145.0 3.1
MEXICO 2,472.0 1.5
OTHER 4,478.0 2.70
Countries AT&T operates in:
Spain, France, Japan, South Korea, Australia,
Hong Kong, Switzerland, Malaysia, Russia,
Singapore, Guam, Hong Kong and Antigua &
Barbuda.

8. CAPITAL EXPENDITURE
YEAR CAPITAL EXPENDITURE
(in millions)
2012
-19465
2013
-20944
2014
-21199
2015
-19218
2016
-22408
Last 12
Months -22930
-15%
-17%
-17%-15%
-18%
-18%
CAPITAL EXPENDITURE
2012
2013
2014
2015
2016
LAST 12 MONTHS

9. SWOT ANALYSIS
STRENGTHS:
•One of the largest tele-communication operators in
US.
•Strong Infrastructure
•One of the largest television subscription providers
•Variety of wired and wireless capabilities
•Business customers range from large multinationals
to small businesses.
•Expanding international business
WEAKNESS:
•Risky investments
•Innovative but inflexible
•Defenseless against competition
•Weak position against major global
telecommunication brands
OPPORTUNITIES:
•Diversification
•New acquisitions
THREATS:
•Intensifying competition
•Increased costs

10. THE COMPETITORS
VERIZON​ AT&T​ T MOBILE​ SPRINT​
STRATEGY
HIGHLIGHTS​
Differentiation, Very
similar to AT&T and
closest competitor,
superior service, focuses
on the fastest network.​
Differentiation,
Somewhat Cost
leadership, Superior
Service, Reliable Service,
Fastest Service.​
Cost leader, no
contract,no fast network.​
Unlimiteddata and phone
plans for a flat rate.​
RATIONALE​ Attracts consumers who
wants the best service.​
Consumers pay more
dollars for superior
service.​
Believe they can
attractconsumers of all
background.​
Value for money and
there are some overages.​
PROS​ Fastest service.​ More money coming into
the company, best service
provider out there, not
terribly more expensive
then cheap service​
Attracts consumers from
all background, has a
wide range of consumers.​
Not many complaints on
overages or extra charges,
can forecast future
revenue easily.​

11. DIVIDEND YIELD
DIVIDEND YIELD= 5.39% 12 MONTH DIVIDEND= $1.95

13. DDM MODEL
SINGLE STAGE DDM MODEL:
DPS(D0) $1.96
LONG TERM GROWTH RATE 0.02
RATE OF RETURN 0.07
D0(1+g) 2.00
Intrinsic value $39.984

14. FREE CASHFLOW TO FIRM
FREE CASH FLOW TO THE FIRM
2016 2017 2018 2019 2020 2021TV
FCFF 20289 21050 21840 22659.60 23510 24392 931272.5
WACC 5%
Short term growth 3.75%
Long term growth 2%
PV of Cash Flows 20048 19810 19574.21 19342 19112 729676.3
Intrinsic Value per Share 116.29

15. PRICE MULTIPLES
MULTIPLES
P/E P/S P/B P/CF EV/EBITDA
VERIZON 13.63 1.68 7.74 9.47 6.84
CHINA MOBILE LTD 12.28 1.87 1.34 5.16 3.38
ADTRAN 27.46 1.55 2.15 30.14 14.59
T MOBILE 27.97 1.27 2.51 6.75 7.53
ALASKA COMMUNICATIONS 8.64 0.47 0.7 3.11 5.07
AT&T 15.8 1.4 1.79 5.71 6.9
MEDIAN 14.72 1.48 1.97 6.23 6.87
EPS 2.92
SALES PER SHARE 6.44
BOOK VALUE PER SHARE 20.35
FREE CASHFLOW PER SHARE 2.67
EBITDA 2.02
42.9678 9.499 40.0895 16.6341 13.8774
WEIGHTS 0.2 0.2 0.2 0.2 0.2 1
INTRINSIC VALUE 24.61

16. TARGET PRICE VALUATION
VALUATION MODELS INTRINSIC VALUE WEIGHTS INTRINSIC VALUE*WEIGHTS
DDM MODEL $ 39.98 0.33 13.19
Free cashflow to Firm $ 116.29 0.33 38.37
Multiples $ 24.61 0.33 8.12
TARGET PRICE $ 59.69
CURRENT PRICE - $36.43(Undervalued)

17. RECOMMENDATION
 I recommend holding all the shares.
 Change our target price to $59.69