Courtesy of Benzinga.
AT&T Inc. (NYSE: T) shares are not winning any sprints in the short-term, but they could be the turtle that wins the marathon.
The stock has rebounded off the lows along with the broader market, but are nowhere near hitting new all-time highs — yet. This company is beloved for its dividend, but is that enough to push the stock to the levels that the charts (see below) are predicting?
Let's take a look at the combined fundamental and technical picture.
What The Bulls See
- Cheap valuation metrics: An enterprise value of $259 billion vs. a market capitalization of $186 billion, a price-to-book of 2.01 and a price-to-sales of 1.42.
- A dividend of 5.1 percent that should remain steady given the payout ratio of 56 percent.
- 13.05 percent net profit margins that spin-off over $12.46 billion in annual levered free cash flows.
What The Bears See
- A PE of around 14, which seems very expensive when compared to the estimated 2015 growth rates in revenues and earnings of 2.4 percent and 1.6 percent, respectively.
- High debt: 81 percent debt-to-equity ratio and a current ratio below 1.
The Technical Take
Technicians note that AT&T shares have a great long-term future based on the looks of the monthly chart. They note that the stock appears to be in the midst of a fifth wave higher with an eventual target of $41-$42. That level would mean the wave "v" on the chart roughly matches wave "i" in magnitude. That level also corresponds with the upper edge of the long-term uptrend channel.
Short-term, the stock has support at $34.84 and $33.10, either of which could be nice entry points for aspiring bulls.
Posted-In: Long Ideas Dividends Technicals Movers Trading Ideas
