NEW YORK (TheStreet) -- Shares of AT&T (T) - Get AT&T Inc. Report were falling 1.6% to $33.47 Thursday following rival telecom Verizon's (VZ) - Get Verizon Communications Inc. Reportfourth quarter results that show the impact of the ongoing industry price war.
Verizon added 2 million postpaid wireless subscribers in the fourth quarter, but said that wireless revenue growth fell to 2.8% for the quarter, compared to 4.8% growth in the third quarter. The carrier also announced that postpaid churn rate, the percentage of subscribers who switched to another wireless provider, rose to 1.14% from 0.96% in the year-ago quarter.
The carrier's lower revenue growth and higher churn rate are due to the ongoing wireless price war, according to Financial Times. Sprint (S) - Get SENTINELONE, INC. Report CEO Marcelo Claure recently said he expects the price war to continue through 2015.
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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 few notable 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, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- T's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 2.5%. 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.
- The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.40 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, AT&T INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for AT&T INC is rather high; currently it is at 55.88%. 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 9.10% trails the industry average.
- You can view the full analysis from the report here: T Ratings Report