NEW YORK (TheStreet) -- AT&T (T) - Get Report stock is gaining by 1.75% to $32.63 in mid-morning trading on Wednesday, after the company said it expects to add more than 2 million wireless consumer and business subscribers in the third quarter.
The telecommunications company expects to see an increase in net additions in every customer category, such as prepaid, postpaid and reseller.
AT&T warned its U-verse TV subscribers declined because the company is focusing on satellite services after acquiring DirecTV in July.
DirecTV subscribers are expected to fall by 918,600 due to a reporting methodology change that will count commercial subscribers as one, instead of an equivalent number of residential subscribers.
AT&T also expects to see a sales boost from the expansion of 4G LTE in Mexico and plans to continue its Latin American satellite projects.
The company is schedule to report its third quarter earnings results on October 22.
Separately, 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 a number of strengths, 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, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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:
- T's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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 $9,160.00 million or 13.50% when compared to the same quarter last year. In addition, AT&T INC has also modestly surpassed the industry average cash flow growth rate of 3.72%.
- The gross profit margin for AT&T INC is rather high; currently it is at 54.14%. 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 9.22% trails the industry average.
- Even though the current debt-to-equity ratio is 1.31, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
- AT&T INC's earnings per share declined by 14.7% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.19 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $1.19).
- You can view the full analysis from the report here: T