AT&T Inc. (NYSE:T) appears to be reaching a pivotal moment that could potentially change market sentiment surrounding the company. With a focus on delivering on its free cash flow goal of $17 billion-$18 billion by 2024, AT&T is showing promising signs of progress that could lead to a resurgence in investor confidence.
In the past year, AT&T has exceeded its free cash flow guidance, generating $16.8 billion in free cash, surpassing its initial projections. Looking ahead to 2024, management is aiming for even greater success with a target of $17 billion-$18 billion in free cash flow. Key drivers for this growth include the expansion of 5G and fiber optic internet subscriptions, continued growth in its wireless customer base, and the success of its operations in Mexico.
Additionally, AT&T has been experiencing margin expansion and debt reduction, which have improved its financial position. The company’s operating margin is at its highest level in at least five years, while its total long-term debt has been significantly reduced. These positive trends are expected to free up additional cash flow that can be used to support the company’s growth initiatives.
Achieving its free cash flow target for 2024 could mark a turning point for AT&T in the eyes of investors. Surpassing this goal for two consecutive years would likely shift market perception of the company from a declining entity to one on a successful turnaround path. This positive sentiment could attract new investors and drive up the company’s stock price significantly.
Furthermore, meeting its free cash flow target would also pave the way for AT&T to potentially resume its dividend growth. As one of the most iconic dividend stocks, AT&T’s dividend payouts hold significant importance for investors. Resuming dividend increases would signal confidence in the company’s financial health and could lead to a boost in market sentiment.
While AT&T faces risks common to the telecommunications industry, such as price competition and regulatory challenges, the company’s unique strengths, including its national wireless and fiber optic network, strategic partnerships with content providers like HBO Max, and successful bundled service offerings, position it well for long-term growth.
Overall, AT&T presents a compelling opportunity for investors, with the potential for significant upside in the coming years. By achieving its free cash flow target and potentially resuming dividend growth, the company could overcome its recent challenges and regain investors’ confidence, leading to substantial stock price gains.
