AT&T (T) Stock Declining Today After Getting Dropped From the Dow Industrials

NEW YORK (TheStreet) -- Shares of AT&T (T) are declining, down 1.41% to $33.52 in late morning trading Friday, on reports that Apple (AAPL) will be replacing the company in the Dow Jones Industrial Average after the market closes on Wednesday, March 18. The move reflects the iPhone maker's dominance in the U.S. economy, Reuters reports.

The decision to move AT&T aside shows how much communications and technology have evolved over the last several decades, Reuters added.

S&P Dow Jones Indices said the change, which was prompted by Visa's (V) 4-for-1 stock split, will take effect on Thursday, March 19 at the start of trading.

S&P said the move will reduce the weighting of the information technology sector in the index.

Dallas, TX-based AT&T is a provider of telecommunications company, offering services including wireless communications, local exchange, long-distance, data/broadband and Internet, video, telecommunications equipment, managed networking, wholesale and directory advertising, and publishing.

Separately, TheStreet Ratings team rates AT&T INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

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

  • T's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 3.8%. 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 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that T's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, AT&T INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $5,745.00 million or 27.43% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, AT&T INC has marginally lower results.
  • You can view the full analysis from the report here: T Ratings Report

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