AT&T (T) Stock Gaining on Mexico Expansion Talks

NEW YORK (TheStreet) -- Shares of AT&T (T) are gaining 1% to $34.97 in Thursday's midday trading following the announcement of the company's latest strategy to expand its markets to Mexico.

The company is planning to create the first seamless network within the U.S. and Mexico and become a leader in the industry, The Wall Street Journal reported.

"Today in Mexico, we have the deepest spectrum position in the country,"AT&T CEO Randall Stephenson told attendees at the JPMorgan Global Technology, Media and Telecom Conference on Tuesday."Utilizing that spectrum position to perhaps deploy broadband over wireless tech is also something we're looking very closely at."

Stephenson said that the Mexican market was attractive for many reasons: it was underdeveloped as far as capabilities and it also recently passed new legislation that made it easier for new entrants to come into the market, according to the Dallas Business Journal.

Earlier this quarter, the company bought Mexico's telecommunications company Iusacell for $2.5 billion, and in late April announced its $1.88 billion completion of its acquisition of Nextel Mexico from NII Holdings (NIHDQ), which provides mobile communications services in Argentina and Brazil.

According to the company, it will merge Iusacell and Nextel into a single company for wider coverage and as part of its plan to create "the first-ever North American Mobile Service area."

Additionally, a Reuters report stated that the telecommunications and wireless communications services provider is preparing to bring connected car users exclusive content, including videos and games that can be streamed onto personal mobile devices later this year.

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 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 3.4%. 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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