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May 19, 2022

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Is AT&T Stock A Buy Right Now? Here’s What Earnings, Charts Show

AT&T (T) is one of the most recognizable wireless phone carriers in the U.S. The telecom and media conglomerate has been having a better year so far than it did last year. AT&T stock was down over 16% in 2021. In 2022, shares were initially struggling after a negative earnings report but have since reclaimed support at key moving averages. On the positive side, the stock maintains a high 5.7% annualized dividend yield in a relatively low interest rate environment. Additionally, telecom stocks are sometimes viewed as a safe haven when stock markets turn volatile. Should investors consider buying AT&T stock?




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Currently, the stock market is in a correction which means it’s not the best time to be buying stocks but still a good time for identifying top contenders for your watchlist. Investors should seek out leading stocks in leading industry groups that are outperforming the market. Investors should note that AT&T can be viewed as a defensive play because of its high dividends. 

Now the question is, does AT&T stock deserve a spot in your portfolio or on your watchlist? Let’s look at AT&T from a technical perspective.

AT&T Technical Analysis

AT&T stock had a rough second half of 2021. Shares attempted to breakout from a flat base with a 31.99 buy point earlier in the year. But the breakout failed in late May when share gapped below the 50-day line in heavy volume. Shares of AT&T then fell further below their 200-day moving average as well.

The stock’s been drifting slightly higher over the past several weeks though. After investors reacted negatively to its earnings announcement on Jan. 26, shares have started turning around and even moved higher after its most recent earnings release.

On Apr. 21, earnings were released before the market opened. In response to a positive report, shares rose 4%. After a gap up in heavy volume in early April, shares officially reclaimed key moving averages like the 21-day and 50-day line.

Despite a lot of repair work in recent weeks, AT&T stock still maintains a lower-than-ideal Relative Strength Rating of 76, which is below the minimum of 80 for ideal growth stock contenders. The RS line measures a stock’s performance against the S&P 500. Ideally, an RS line should be at or near a new high when a stock breaks out.

AT&T Stock: WarnerMedia, Discovery Merger

According to IBD Stock Checkup, AT&T stock ranks No. 2 in terms of Composite Rating within the telecom services industry group.

In May of 2021, AT&T agreed to merge its WarnerMedia business with Discovery (DISCA). The wireless service provider planned to merge its WarnerMedia business with Discovery in a deal that could close sometime within the second quarter.

The WarnerMedia division and Discovery are merging to form Warner Bros. Discovery, which will trade as WBD stock. Warner Bros. Discovery is expected to start trading early in the second quarter. AT&T shareholders will own 71% of the new company and Discovery shareholders will own 29%.

The new company will include streaming video services HBO Max, Discovery+ and CNN+, and will compete with Walt Disney (DIS), Netflix (NFLX) and others. But it also will have a host of legacy pay-TV channels and production studios. Included are such brands as HBO, Warner Bros., Discovery, DC Comics, CNN, Cartoon Network, HGTV, Food Network, TNT, TBS, Eurosport, Magnolia, TLC and Animal Planet.

AT&T Earnings

AT&T reported earnings on Apr. 21. Earnings for the March-ended quarter came in ahead of Wall Street projections. AT&T earned 77 cents per share on an adjusted basis, down 9% from a year earlier. Revenue fell 13% to $38.1 billion.

In the earnings release, the company said “adjusted EPS for the prior year quarter has been recast for consistency to include gains on benefit-related and other cost investments.”

Also, AT&T said it added 691,000 postpaid wireless phone customers vs. estimates for a 423,000 gain. In the March quarter, AT&T wireless service revenue climbed 4.8% to $14.7 billion versus estimates of $14.72 billion.

Results for AT&T included WarnerMedia — which was spun off on April 5 — but excluded satellite TV broadcaster DirecTV. AT&T spun off DirecTV and its pay-TV business to TPG Capital in August 2021.

Is AT&T Stock A Buy?

AT&T stock should not be bought right now given the unstable market conditions and AT&T’s current technical set-up. It was encouraging to see shares gain support at key levels of support. But the stock has a long way to go before it could be actionable Also, investors want to prioritize stocks that have seen growth of at least 25% in earnings and sales in recent quarters. T stock currently falls far below that.

Despite its 5.7% dividend yield, AT&T stock is not one to be added to your portfolio right now. Investors will need to wait for the stock to form a better chart pattern and for market conditions to improve. Investors can check IBD stock lists and other IBD content to find the best stocks to buy or watch.

Follow Fox on Twitter at @IBD_RFox for more commentary on the best stocks to buy and watch.

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