AT&T (T) Up 5.4% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for AT&T (T). Shares have added about 5.4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is AT&T due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for AT&T Inc. before we dive into how investors and analysts have reacted as of late.

T Beats Q2 Earnings Estimates on Higher Revenues, Solid Demand

AT&T reported strong second-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.

The company witnessed solid wireless traction and customer additions, which were partially offset by lower demand for legacy voice and data services. AT&T recorded strong subscriber growth backed by a resilient business model and robust cash flow position, driven by a diligent execution of operational plans. AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth.

Net Income

On a GAAP basis, AT&T reported a net income of $4.46 billion or 62 cents per share compared with $3.55 billion or 49 cents per share in the year-ago quarter. The significant improvement was primarily attributable to higher contributions from the DIRECTV investments during the quarter.

Excluding non-recurring items, adjusted earnings improved to 54 cents per share from 51 cents a year ago. Adjusted earnings for the second quarter surpassed the Zacks Consensus Estimate by three cents.

Quarter Details

Quarterly GAAP operating revenues increased 3.5% year over year to $30.85 billion, largely due to higher Mobility service and equipment sales and Consumer Wireline revenues, partially offset by lower Business Wireline and Mexico revenues. The top line beat the consensus mark of $30.53 billion. 

Adjusted operating income increased to $6.49 billion from $6.28 billion for respective adjusted operating income margins of 21% and 21.1%. Adjusted EBITDA improved to $11.73 billion from $11.34 billion.

AT&T witnessed solid subscriber momentum with 479,000 post-paid net additions. This included 401,000 postpaid wireless phone additions. Postpaid churn was 1.02%, while postpaid phone-only average revenue per user (ARPU) increased 1.1% year over year to $57.04 due to improved international roaming, pricing actions and a transition to higher-priced unlimited plans.

Segmental Performance

Communications: Total segment operating revenues were $29.7 billion, up from $28.58 billion, as improvement in the Mobility business (up 6.7% to $21.84 billion) and Consumer Wireline (up 5.8% to $3.54 billion) was partially offset by a decline in Business Wireline (down 9.3% to $4.31 billion). The segment revenues missed our estimates of $29.72 billion.

Service revenues from the Mobility unit improved 3.5% to $16.85 billion, driven by solid subscriber and postpaid ARPU gains, while equipment revenues were up 18.8% year over year to $4.99 billion due to higher volumes of non-phone sales and higher-priced phone sales. Revenues from the Consumer Wireline business were up due to a gain in fiber broadband. AT&T recorded net fiber additions of 243,000, while Internet Air added 203,000 subscribers during the quarter. By the end of 2030, AT&T expects to reach approximately 50 million customer locations with its in-region fiber network and more than 60 million fiber locations when including the Lumen Mass Markets fiber assets. Revenues from Business Wireline were down due to lower demand for legacy voice and data services as customers shifted to more advanced IP-based offerings. Total segment operating income improved 0.9% to $7.06 billion, with operating margins of 23.8% (down 70 bps). Adjusted EBITDA was $12.1 billion compared with $11.78 billion in the year-ago quarter.

Latin America: Total operating revenues were $1.05 billion, down 4.4% year over year, due to lower equipment sales and service revenues. Adjusted EBITDA improved to $201 million from $178 million in the year-ago quarter.

Cash Flow & Liquidity

For the first six months of 2025, AT&T generated $18.81 billion of cash from operations compared with $16.64 billion a year ago. Free cash flow for the quarter was $4.39 billion compared with $3.95 billion in the year-ago quarter. As of June 30, 2025, AT&T had $10.5 billion of cash and cash equivalents with long-term debt of $123.06 billion. The company repurchased $1 billion worth of shares during the quarter. Net debt to adjusted EBITDA was about 2.64X.

Guidance

While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs while focusing on 5G and fiber-based connectivity, along with an expanded reach of software-based entertainment platforms. For 2025, AT&T expects wireless service revenues to improve 3% or more, while broadband revenues are anticipated to grow in the mid to high-teens. Adjusted earnings are projected to be between $1.97 and $2.07 per share. Free cash flow in 2025 is expected to be more than $16 billion due to cost savings. AT&T expects to repurchase $4 billion worth of shares in 2025. The company is also aiming to reduce its debt burden by monetizing non-core assets.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

VGM Scores

Currently, AT&T has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock has a score of B on the value side, putting it in the top 40% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, AT&T has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

AT&T is part of the Zacks Wireless National industry. Over the past month, Verizon Communications (VZ), a stock from the same industry, has gained 4.5%. The company reported its results for the quarter ended June 2025 more than a month ago.

Verizon reported revenues of $34.5 billion in the last reported quarter, representing a year-over-year change of +5.2%. EPS of $1.22 for the same period compares with $1.15 a year ago.

For the current quarter, Verizon is expected to post earnings of $1.20 per share, indicating a change of +0.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.

Verizon has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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