AT&T Stock Soars 50% Amid Financial Recovery Efforts

AT&T shares have surged over 50% in the last year, reaching a 52-week high. With improved financial health and rising revenue, investors are optimistic about the company's future growth prospects as it transforms under CEO John Stankey.

Date: 09-03-2025

AI Rating: 7

AT&T's Financial Recovery and Performance

AT&T is experiencing a resurgence in its stock price, which is up more than 50% over the past year and hit a significant milestone with a 52-week high of $27.97. This reflects the company's efforts in restructuring under CEO John Stankey, who has shifted focus back to the core telecom business after a challenging period marked by excessive debt from acquisitions of entertainment assets.

One of the central indicators of AT&T's financial turnaround is its revenue growth, which has recently seen a modest increase. The company reported revenues for the fourth quarter at $32.3 billion, a year-over-year increase of 1%. This is primarily driven by growth in mobile services and equipment sales.

Moreover, the anticipated growth of earnings per share (EPS) is another positive indicator. For 2025, AT&T expects EPS to reach between $1.97 and $2.07, with a projected double-digit percentage increase by 2027. This upward trend, particularly after accounting for the divestiture of DirecTV, indicates a healthier financial picture for shareholders moving forward.

Free Cash Flow (FCF) is also forecasted to grow by $1 billion annually through 2027, with 2024's FCF reported at $15.3 billion (excluding DirecTV). Increasing FCF is crucial as it signifies cash available for investment, debt repayments, share repurchases, and dividends. The anticipated increase in FCF further underlines AT&T's investment appeal.

The company’s aim to reduce its debt burden is seen as a vital component of its strategy. By aiming to achieve a net debt-to-adjusted EBITDA ratio of 2.5x by the first half of 2025, the financial structure is expected to become healthier, enhancing investor confidence in its long-term prospects. The company exited 2024 with total debt reduced to $123.5 billion from $137.3 billion in 2023.

Overall, the combination of growing revenue, rising EPS, and increasing FCF, alongside effective debt management, positions AT&T as a viable investment option for investors seeking stability and income through dividends. The company's stock performance reflects this shift, suggesting that there may be more potential upside as financial health continues to improve.

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