AT&T (T) Stock: This Pullback Is a Buying Opportunity

With demand increasing and supply remaining the same, we look for an eventual upside breakout
By Bruce Kamich ,

NEW YORK (TheStreet) -- AT&T (T) - Get Report is a brand name that needs little or no introduction and the charts suggest that its recent pullback is a buying opportunity.

This first chart of T, above, shows that the $32 level is key. Notice all the dips to $32 and very briefly below $32 over the past twelve months. The indicators -- moving average, On-Balance-Volume (OBV) line and Moving Average Convergence Divergence (MACD) oscillator -- are basically neutral, but the price action is clear.

In this Point and Figure chart of T, above, we ignore time and volume and focus just on the price action. In the past three years one can see that buyers of T came in at $28, then $29 and then $31. The buyers of T have become more aggressive. Rallies have stalled at $34 with one "print" at $35. With demand increasing and supply staying the same, we look for an eventual upside breakout. We suggest a sell-stop below $31.

TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate AT&T INC (T) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $10,797.00 million or 23.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.31%.
  • The gross profit margin for AT&T INC is rather high; currently it is at 55.43%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.65% trails the industry average.
  • AT&T INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.23 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $1.23).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income has decreased by 4.3% when compared to the same quarter one year ago, dropping from $3,130.00 million to $2,994.00 million.
  • You can view the full analysis from the report here: T

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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