AT&T INC. (T): what the price requires
At today's price, AT&T INC. (T) is priced for today's economics sustained for ~7.2 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/T
Headline
| Field | Value |
|---|---|
| Ticker | T |
| Company | AT&T INC. |
| Sector / Industry | Communication Services |
| Current price | $21.55/sh |
| Composition | Wireless service 56% / Fiber and advanced connectivity 13% / Non-fiber consumer broadband 3% / Legacy and other transitional 8% / Other 1% / Equipment 19% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | segment |
| Must persist for | 7.2y |
Solve inputs: computed at a 7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.7 years (computed at the 7% minimum rate; the CAPM rate 5.7% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~13.9 years; the models below use their own rates.
How unusual the bet is: high
| Reference | Value |
|---|---|
| cohort percentile (of 32 peers) | 100 |
| sustained it ~7.2 years at this level | 21% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.78x | 5 | justifies |
| Earnings | 0.84x | 4 | justifies |
| Relative | 0.61x | 5 | justifies |
| Growth | 0.64x | 4 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $48.48 | 0.44x | yes | FCF base $19.4B, growth 3% (input: historical growth), terminal g 2.9%, WACC 8.7%, 5yr projection |
| DCF Exit Multiple | Growth | $28.54 | 0.75x | yes | Exit EV/EBITDA: 4.0x / 3.6x / 5.6x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $35.60 | 0.61x | yes | P/E 12x (static sector reference · 2026-04), scenarios: 10.1x / 12.0x / 13.9x (bear / base = reference held flat / bull), EV/EBITDA 7x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $40.62 | 0.53x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $24.14 | 0.89x | yes | BV/sh $15.61, ROE (TTM) 14.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $29.69 | 0.73x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $16.34 | 1.32x | yes | Rev $126.5B, growth 3% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.2x / 1.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $26.14 | 0.82x | yes | EPS $2.18, growth 2% (input: historical EPS growth), PEG=4.83 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $20.78 | 1.04x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $16.82B × (1−22%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $30.61 | 0.70x | yes | BV $15.61 + 5yr PV of (ROE (TTM) 14.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $27.66 | 0.78x | yes | √(22.5 × EPS $2.18 × BVPS $15.61) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $43.59 | 0.49x | yes | EBITDA $45.73B × sector EV/EBITDA 7.0x |
| FCF Yield | Earnings | $27.95 | 0.77x | yes | FCF $19442.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $70.29 | 0.31x | yes | EPS $2.18 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $7.56 | 2.85x | yes | BV $15.61 × (ROIC 4.2% / WACC 8.7%) |
| P/Sales Sector | Relative | $27.01 | 0.80x | yes | Revenue $126.53B × sector P/S 1.5x |
| PEG Fair Value | Relative | $81.68 | 0.26x | yes | EPS $2.18 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $23.55 | 0.91x | yes | EPS $2.18 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $131.0b |
| Net debt / NOPAT (after-tax) | 6.69x |
| Net debt / operating income (pre-tax) | 5.23x |
| Interest coverage | 3.7x |
| Share count CAGR (buyback) | -1.8% |
| Burning cash | no |
Bullet Takeaways
- AT&T pairs a mature wireless base (56% of revenue) with a fiber growth engine the 10-K calls the driver of broadband demand expansion of our fiber and AIA serviceable locations will drive greater demand for broadband services [FY2025 10-K, accession 0000732717-26-000120], generating $19.4B of trailing free cash flow against a $148.5B market value.
- The biggest risk is the $131B net debt stack at 3.6x interest coverage, about to absorb a roughly $23B spectrum purchase, which makes the equity acutely sensitive to rates and refinancing costs.
- Watch the July 22, 2026 earnings print: management targets $4.0B to $4.5B of second-quarter free cash flow and reiterated FY2026 guidance, and the EchoStar spectrum closing timeline should firm up after the FCC's May 2026 approval.
Bull Case
AT&T is a mature company, and the bull case starts by accepting that rather than apologizing for it. A business with $126.5 billion in trailing revenue does not get read on how fast the top line can compound; it gets read on whether the cash machine is durable and whether management is pointing the cash at the right things. On that reading, the numbers are unusually clean. The company generated $19.4 billion of trailing free cash flow against a $148.5 billion market capitalization, earned a 14.3% return on equity over the trailing year, and has shrunk its share count roughly 1.8% a year over the past four years. That is a mature business behaving the way holders want mature businesses to behave: converting scale into cash and returning it.
Inside the mature shell sits a genuine growth engine. Fiber and advanced connectivity now carries about 13% of revenue, and the strategy is explicit in the 10-K, which states that expansion of our fiber and AIA serviceable locations will drive greater demand for broadband services and that the simplified go-to-market strategy for 5G in underpenetrated markets will continue to contribute to wireless subscriber and service revenue growth [FY2025 10-K, accession 0000732717-26-000120]. The first quarter of 2026 delivered on both halves: 584,000 fiber and fixed-wireless advanced internet net additions, which management called its best first quarter ever for that metric, alongside 294,000 postpaid phone additions driven by bundling wireless with fiber. The bundle is the point. A customer taking both products churns less and costs less to serve, so each fiber passing deepens the moat around the wireless base rather than merely adding a broadband line.
The cost side has its own lever. The filing describes continuing our deployment of Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, fostering lower network costs, improved operational efficiencies [FY2025 10-K, accession 0000732717-26-000120], and the Communications segment's operating income margin has held steady at 23.1% in 2025 versus 23.0% in 2024 while the mix shifted toward fiber. Concede the obvious: this is a levered balance sheet, and the debt is the bear's opening argument. But leverage against $19.4 billion of free cash flow and a subscriber base that renews monthly is a different animal than leverage against cyclical earnings, and the falling share count says management believes the equity is the better claim on that cash. First-quarter operating income grew 15.7% year over year, which is not the trajectory of a melting business.
Bear Case
The variable with the most leverage on this stock is the price of money, and the exposure runs through $142.9 billion of gross debt, $131.0 billion net of cash. Interest coverage sits at 3.6 times operating income, and net debt runs about 5.2 times trailing operating income. Every refinancing cycle reprices a slice of that stack at whatever rates prevail, and the company is adding to it rather than working it down: the roughly $23 billion EchoStar spectrum purchase agreed in August 2025 and the acquisition of Lumen's mass-markets fiber business both land on a balance sheet that already carries more debt than most countries' telecom sectors. Q1 2026 beat on revenue and earnings, and the stock fell anyway on precisely this concern. The market is telling you which line of the balance sheet it is watching.
Regulation adds a second exposure the price gives little credit for. The growth story depends on retiring the legacy copper network, and the 10-K is blunt about the gate: If we do not obtain regulatory approvals for our network transition or obtain approvals with onerous conditions, we could experience significant cost and competitive disadvantages [FY2025 10-K, accession 0000732717-26-000120]. Legacy and transitional products still carry about 8% of revenue, declining by design, and the pace at which regulators let AT&T shed the copper cost base largely determines whether the fiber margin story arrives on schedule. Cost inflation cuts the same direction; the filing notes that the costs of these inputs and the costs of labor necessary to develop, deploy and maintain our networks and our products and services have increased [FY2025 10-K, accession 0000732717-26-000120], and a $23 to $24 billion annual capital program is a lot of surface area for input-cost pressure.
The competitive field is not getting friendlier. Verizon and T-Mobile fight for the same postpaid phone customer, cable operators sell mobile lines as a retention tool, and the risk factors concede that if customers decide that our competitors offer a more customer-friendly environment, our competitive position, results of operations or financial condition could be materially adversely affected [FY2025 10-K, accession 0000732717-26-000120]. Meanwhile the piece of the business the price leans on hardest, consumer wireline, has to keep growing near the fastest pace it can fund internally for roughly six more years to hold up its share of today's price, and only about a quarter of comparable fast-growers have sustained that kind of run over a similar horizon. Wells Fargo initiated at Sell with an $18 target on July 8, 2026, and the sell case writes itself from here: a levered, capital-hungry business in a three-way knife fight, where the growth engine has to run flawlessly for years while rates decide what the debt costs.
Valuation
At $21.13 (July 10, 2026), the market is paying roughly what AT&T's current earnings power is worth with no growth at all. A capitalization of normalized operating earnings, with one-time charges added back, lands almost exactly at the current price, and every family of method we use to triangulate sits at or above it: the price sits at about 76% of where asset-based approaches land, 83% of earnings-power approaches, 59% of peer-multiple approaches, and 63% of cash-flow-based approaches. That pattern is the opposite of the usual large-cap setup. Nothing here says the price is stretched; the methods collectively read it as a value name, where the market's skepticism about the debt and the legacy decline is doing the discounting.
The bet embedded in the price is concentrated in one place. Worked backward, today's price leans on the consumer wireline business, the fiber side, sustaining operating-income growth near the fastest pace it can fund from its own cash flow, roughly 25% a year, for about six years. That is a demanding assumption: only about a quarter of comparable fast-growers have held that kind of pace over a similar stretch, though the read rests on a small earnings base and is best treated as directional. The rest of the company is priced modestly. At $2.18 of trailing GAAP earnings per share the stock trades near 9.7 times earnings against a sector median of 12 times, and the Communications segment ran a 23.1% operating income margin in 2025, up from 23.0% in 2024, with segment EBITDA margin at 39.6% [FY2025 10-K, accession 0000732717-26-000120]. Wireless service carries 56% of revenue and fiber another 13%, so the earnings base being capitalized is mostly subscription income that renews monthly.
The balance sheet is what bounds the story on both ends. Net debt of $131.0 billion runs about 5.2 times trailing operating income, interest coverage is 3.6 times, and the company is not burning cash; free cash flow was $19.4 billion over the trailing year while the share count fell about 1.8% annually over four years. That leverage is why a stock priced below every method family still is not a free lunch: the equity is a thinner slice of a large enterprise, and small changes in what the debt costs move what is left for shareholders. The most decisive fact remains the simplest one: the price asks the fiber business to be excellent and the rest of the company merely to be what it already is.
Catalysts
The next scheduled event is second-quarter earnings on July 22, 2026. Management has set a specific bar for itself: $4.0 billion to $4.5 billion of second-quarter free cash flow, alongside reiterated full-year guidance of FY2026 adjusted EPS of $2.25 to $2.35 and adjusted EBITDA growth of 3% to 4%. The first quarter cleared its own hurdles, with revenue of $31.5 billion beating the roughly $31.3 billion consensus and adjusted EPS of $0.57 against a $0.55 estimate, but the stock sold off on debt concerns anyway, so the market's attention at the July print will likely sit on cash flow and leverage rather than the subscriber lines.
The EchoStar spectrum transaction is the other live thread. The FCC approved the roughly $23 billion purchase of 600 MHz and 3.45 GHz licenses on May 12, 2026, but the closing has slipped past the original mid-2026 timeline, and the delay has left EchoStar itself strained enough to defer debt payments. When the deal funds, it lands on AT&T's balance sheet, so the financing plan and any updated leverage targets management offers on July 22 matter as much as the spectrum itself. Capital spending guidance of $23 to $24 billion for the year frames how much room the budget has for both.
Analyst sentiment is split in an unusually visible way. Wells Fargo initiated coverage at Sell with an $18 price target on July 8, 2026, while the broader consensus remains a Buy with an average target near $28.25. A federal judge also dismissed the investor lawsuit over lead-clad cable disclosures in mid-June 2026, removing one legal overhang. The split thesis and the debt-heavy calendar make the July print the near-term decider.
Peer Cohorts (Per Segment, With Filing Citations)
Mobility / Business Wireline / Consumer Wireline (reported)
- VZ (VERIZON COMMUNICATIONS INC)
- (no filing in the citation store)
- TMUS (T-Mobile US, Inc.)
- (no filing in the citation store)
- CHTR (Charter Communications, Inc.)
- (no filing in the citation store)
- CMCSA (Comcast Corporation)
- (no filing in the citation store)
Core business (reported)
- VZ (VERIZON COMMUNICATIONS INC)
- (no filing in the citation store)
- TMUS (T-Mobile US, Inc.)
- (no filing in the citation store)
- TLK (PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA TBK)
- (no filing in the citation store)
- TIGO (MILLICOM INTERNATIONAL CELLULAR SA)
- (no filing in the citation store)
- KT (KT Corporation)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
AT&T Q1 2026 earnings release, April 2026 · AT&T announcement, August 2025 · Investing.com, Q1 2026 earnings coverage · Wells Fargo initiation, July 8, 2026 · AT&T Q1 2026 earnings materials · Q1 2026 earnings coverage, April 2026 · FCC approval, May 2026; Light Reading, July 2026 · analyst consensus, July 2026 · court ruling coverage, June 2026