AT&T's stock surged 4.8% to $24.06 following a second-quarter earnings report that outperformed analyst expectations, primarily driven by stronger-than-anticipated free cash flow and subscriber growth.
Strong Cash Flow and Subscriber Growth Drive the Rally
The Dallas-based telecom giant posted adjusted earnings per share of $0.65, beating the consensus estimate of $0.59 despite a slight miss on revenue, which came in at $31.56 billion versus the $31.80 billion forecast. What really caught investors’ attention was the $4.7 billion in free cash flow generated during the quarter, marking a 6.3% rise compared to last year and exceeding company guidance of $4.0 billion to $4.5 billion.
Adjusted EBITDA increased 5.2% year over year to $12.3 billion, with the EBITDA margin expanding by 110 basis points to 39.1%. Operational improvements are clearly underway, contributing to this margin expansion.
Customer Gains and Outlook Upgrade
AT&T added 432,000 postpaid phone subscribers, well ahead of the Wall Street estimate of 338,500, while total advanced connectivity subscriber additions surpassed one million, fueled by growth in fiber and fixed wireless segments. This momentum shows the company’s successful customer acquisition efforts.
Looking ahead, management raised its fiscal 2026 earnings per share guidance to a range of $2.25 to $2.35, sitting close to the current analyst consensus estimate of $2.31. The quarterly dividend remains steady at $0.2775 per share, yielding 4.6%, which continues to appeal to income-focused investors.
Following the earnings release, Wolfe Research upgraded AT&T’s rating. Other analysts showed mixed target adjustments but generally maintain a favorable view, with a consensus Moderate Buy rating and an average price target around $29.19.
