AT&T's 1Q16 Earnings Are Coming: Will It Be a Solid Quarter?
AT&T’s earnings in 1Q16
AT&T (T) will report its 1Q16 results on April 26, 2016. In this series, we’ll take a look at the expectations for the company’s performance during the quarter. Specifically, we’ll look at some key operating and financial measures of the telecom company.
Wall Street analysts expect decent YoY (year-over-year) growth in AT&T’s earnings in 1Q16. Based on the Wall Street analyst consensus estimate, adjusted EPS (earnings per share) is expected to grow by ~9.8% YoY to ~$0.69 during the quarter. Earlier in 4Q15, AT&T’s adjusted EPS had increased by ~12.5% YoY.
Consensus versus actual performance in the recent quarters
AT&T’s earnings were mostly in line with Wall Street’s expectations in 4Q15. But they were higher than expected by Wall Street’s analysts in 1Q15, 2Q15, and 3Q15. During 3Q15 and 2Q15, AT&T’s earnings were significantly above consensus estimates of analysts by ~7.6% and ~8.5%, respectively.
AT&T’s core margins in 1Q16
Wall Street’s analysts expect AT&T’s margins to improve YoY in 1Q16. According to the consensus of analysts, the telecom player’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin is expected to be ~32.9% in 1Q16, as compared to ~32.2% in 1Q15. Earlier in 4Q15, the telecom company’s adjusted EBITDA margin expanded to ~29.1% from ~27.5% in 4Q14.
For diversified exposure to telecom companies in the US, you might consider investing in the iShares Russell 1000 Value ETF (IWD). IWD held a total of ~2.7% in AT&T, Verizon (VZ), Level 3 Communications (LVLT), CenturyLink (CTL), and T-Mobile (TMUS) at the end of March 2016.
Now let’s take a look at AT&T’s expectations for revenue growth in 1Q16.
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