Why AT&T (T) Stock Is Up Today

NEW YORK (TheStreet) -- AT&T  (T) rose Thursday amid reports that DirecTV  (DTV) is speaking with advisers, such as Goldman Sachs  (GS), about a possible combination with the wireless carrier, which has pursued a takeover of the satellite television company.

DirecTV and the advisers have been evaluating whether or not to dive into serious conversations with AT&T, though the exact status of the talks remained unclear, according to the reports. DirecTV has discussed an AT&T combination at board meetings, but the company also thinks the wireless carrier could have more interest in buying Dish Network (DISH). DirecTV does not own any wireless spectrum, but Dish has accumulated billions in wireless airwaves under chairman Charlie Ergen in the past few years.

The stock was up 1.43% to $36.27 at 10:16 a.m. on Thursday.

----------

Separately, TheStreet Ratings team rates AT&T INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, 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 2.3%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $8,799.00 million or 7.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.15%.
  • The debt-to-equity ratio is somewhat low, currently at 0.88, 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 0.42 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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 58.98%. 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, T's net profit margin of 11.24% compares favorably to the industry average.
  • You can view the full analysis from the report here: T Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.


WATCH: More market update videos on TheStreet TV

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

More from Markets

Global Rally Stalls as Trump Doubts North Korea Summit, Questions China Trade

Global Rally Stalls as Trump Doubts North Korea Summit, Questions China Trade

Lowe's Snags Ex-Home Depot Exec as CEO; ISPs Face Competitive Threat -- ICYMI

Lowe's Snags Ex-Home Depot Exec as CEO; ISPs Face Competitive Threat -- ICYMI

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Legal Weed Sales in California Are Off to a Less Than Smokin' Start

Legal Weed Sales in California Are Off to a Less Than Smokin' Start

Owner of Moviepass Sees Stock Plummet

Owner of Moviepass Sees Stock Plummet