Is AT&T stock a bargain? The communications giant has roughly $120 billion annual revenue. And its stock is only 19.08 a share right now. But cheap doesn't necessarily mean buy-worthy.
The Dallas-based company reported lower sales, on a year-over-year basis, the last three quarters, and lower profits in two of the four periods. It may have turned a corner though. In its latest quarter, profits rose 9% and sales edged up too. On Thursday, the Relative Strength (RS) Rating for AT&T (T) stock climbed to 74, meaning its stock performance this past year topped 74% of all other stocks.
XAT&T Stock Improving, Still Needs Work
It's a welcome improvement but still a few points below the ideal. Research shows that the best stocks to buy and watch typically have an 80 or higher RS Rating in the early stages of their moves. See if AT&T can continue to show renewed price strength and clear that threshold.
Among its other key ratings, AT&T stock has a 61 Composite Rating, of 99, and a 61 Earnings Per Share Rating. Institutional investors like insurance company funds aren't convinced of a turnaround yet. It has a weak D- Accumulation/Distribution Rating on an A+ to E scale. The D- rating shows that big money investors are selling more shares than buying.
On the positive side, AT&T stock recently formed a cup-with-handle base, a pattern that can lead to a breakout. Its stock shot up 6.6% on Jan. 25, the day after it reported its strongest profit in four quarters.
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AT&T stock rose 0.4% Thursday to 19.08. It was the fifth higher close in its last six trading sessions. It rose above its 200-day line last week and topped its 50-day Thursday. Now is not an ideal time to jump in since it isn't near a proper buy zone, but see if the stock is able to form a consolidation and break out.
Profits, Sales Growth Rose The Last 2 Quarters
Regarding fundamentals, AT&T has posted improved EPS growth over the last two quarters. Revenue growth has also improved during the same period. The company is expected to report its next quarterly numbers on or around April 26.
AT&T stock holds the No. 2 rank among its peers in the Telecom Services-Integrated industry group. Calling card vendor IDT (IDT) and digital cable TV and internet services company Charter Communications (CHTR) are also among the group's highest-rated stocks.
IBD's proprietary Relative Strength Rating identifies technical performance by using a 1 (worst) to 99 (best) score that identifies how a stock's price action over the trailing 52 weeks compares to the rest of the market.
Please follow James DeTar on Twitter @JimDeTar
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