AT&T (T) Stock Up After Deal to Offer Hulu Subscription Service

NEW YORK (TheStreet) -- Shares of AT&T (T) are higher by 1.08% to $34.03 in late afternoon trading on Wednesday afternoon. Earlier today the telecom company announced that it has struck a deal with Hulu allowing AT&T to offer Hulu's subscription streaming service to its customers through an AT&T website or mobile app later this year.

"We know that our customers want to be able to access video on multiple devices. So we're excited to be able to expand our relationship with Hulu and make its innovative and vast video selections available to AT&T customers on multiple screens," said Andrew Goodman, associate VP of AT&T content acquisition, in a statement announcing the deal.

Online streaming service Hulu has been looking for tie-ups with pay-TV providers since the second half of 2013, following the company's owner's decision not to sell, the Wall Street Journal reports, adding that Hulu is owned by the Walt Disney Co. (DIS), Comcast (CMCSA), and 21ST Century Fox (FOX).

Earlier this week it was reported that the Justice Department and the Federal Communications Commission are not likely to block AT&T's $49 billion effort to acquire the satellite-TV provider DirecTV (DTV).

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 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 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:

  • T's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 0.3%. 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 gross profit margin for AT&T INC is rather high; currently it is at 55.24%. 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 9.82% trails the industry average.
  • AT&T INC's earnings per share declined by 12.9% 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 ($2.53 versus $1.19).
  • 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 12.4% when compared to the same quarter one year ago, dropping from $3,652.00 million to $3,200.00 million.
  • Even though the current debt-to-equity ratio is 1.12, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Telecommunication Services industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.48 is very low and demonstrates very weak liquidity.
  • You can view the full analysis from the report here: T Ratings Report

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