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AT&T Inc (T) Extended Graph Analysis

October 19th, 2020 Posted by Extended Analysis No Comment yet

Company Profile

AT&T logo

AT&T is a global networking company, a broadband connectivity provider. The company has two segments, the business services, and consumer services business which provides domestic and international long-distance telephone services. The business services segment includes global communications services with three million customers from small to large businesses.

AT&T (T) Extended Graph Analysis

1. AT&T CASH FLOWS

AT&T CASH FLOWS

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 35,880,000,000 39,340,000,000 39,150,000,000 43,600,000,000 48,670,000,000 44,260,000,000
Net cash used for investing activities -49,140,000,000 -24,220,000,000 -20,370,000,000 -63,150,000,000 -16,690,000,000 -19,670,000,000
Net cash provided by (used for) financing activities 9,780,000,000 -14,460,000,000 25,930,000,000 -25,990,000,000 -25,080,000,000 -16,210,000,000
Capital expenditure -19,218,000,000 -21,516,000,000 -20,647,000,000 -20,758,000,000 -19,435,000,000 -18,265,000,000
Free cash flow 16,662,000,000 17,828,000,000 18,504,000,000 22,844,000,000 29,233,000,000 25,992,000,000
Working Capital -11,824,000,000 -12,207,000,000 -2,243,000,000 -12,993,000,000 -14,150,000,000 -14,150,000,000

Facts:

  • Cash provided by operating activities was $44 billion in the trailing twelve months.
  • Net cash used for investing activities was -$19.7 billion in the trailing twelve months.
  • Cash provided by (used for) financing activities was -$16 billion in the trailing twelve months.
  • Capital expenditures were -$18 billion in the trailing twelve months.
  • Free cash flow was $26 billion in the trailing twelve months.
  • Working capital was -$14 billion in the trailing twelve months.

Explanation

  • Cash from operation grew 23 percent in five years However, in 2020 trailing twelve months it fell 9 percent from 2019.
  • Cash from investing activities was purchases of property, plant, and equipment, and purchase and acquisition of a business.
  • Net cash from financing activities was insurance and repayment and cash dividends paid
  • Capital expenditures were purchases of property, plant, and equipment.
  • Free cash flow grew 56 percent in five years.
  • Working capital was negatively impacted in the last five years due of current liabilities was higher than the current assets.

Interpretation

The company has managed to generate positive cash flow from operation in the last five years and was able to produce free cash flows. However, due to the higher liabilities than that of the current assets, working capital was negative from 2015 to 2020 trailing twelve months.

2. AT&T BALANCE SHEET

AT&T BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 5,120,000,000 5,790,000,000 50,500,000,000 5,200,000,000 12,130,000,000
Current Assets 5,990,000,000 38,370,000,000 79,150,000,000 51,430,000,000 54,760,000,000
Net property, plant and equipment 124,450,000,000 124,900,000,000 125,220,000,000 131,470,000,000 154,170,000,000
Total non-current assets 366,680,000,000 365,450,000,000 364,950,000,000 480,440,000,000 496,910,000,000
Total assets 402,670,000,000 403,820,000,000 444,100,000,000 531,860,000,000 551,670,000,000
Current liabilities 47,820,000,000 50,580,000,000 81,390,000,000 64,420,000,000 68,910,000,000
Non-current liabilities 231,220,000,000 229,140,000,000 220,700,000,000 273,560,000,000 280,820,000,000
Total liabilities 279,030,000,000 279,710,000,000 302,090,000,000 337,980,000,000 349,740,000,000
Retained earnings 33,670,000,000 34,730,000,000 50,500,000,000 58,750,000,000 57,940,000,000
Stockholders equity 123,640,000,000 124,110,000,000 142,010,000,000 193,880,000,000 201,930,000,000

Facts:

  • The total cash was $12 billion in 2019.
  • Current assets were $55 billion in 2019.
  • Net property, plant, and equipment were $154 billion in 2019.
  • Total non-current assets were $497 billion in 2019.
  • Total assets were $552 billion in 2019.
  • Current liabilities were $69 billion in 2019.
  • Non-current liabilities were $281 billion in 2019.
  • Total liabilities were $350 billion in 2019.
  • Retained earnings were $58 billion in 2019.
  • Stockholders’ equity was $202 billion in 2019.

Explanation:

  • Total cash represents 22 percent of current assets.
  • Current assets represent 10 percent of total assets.
  • Net property, plant, and equipment represent 28 percent of the total assets.
  • Total non-current assets represent 90 percent of the total assets.
  • Current liabilities represent 20 percent of the total liabilities.
  • Non-current liabilities represent 80 percent of total liabilities.
  • Total liabilities represent 63 percent of the total liabilities and stockholders’ equity.
  • Retained earnings represent 29 percent of the total liabilities and stockholders’ equity.
  • Stockholders’ equity represents 37 percent of the total liabilities and stockholders’ equity.

Interpretation

The company doesn’t have enough liquid to meet its current obligation when the due date comes. The company’s non-current assets consist of buildings and improvements, and machinery, furniture, and equipment.

3. AT&T INCOME AND MARKET

AT&t INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 146,800,000,000 163,790,000,000 160,550,000,000 170,760,000,000 181,190,000,000 175,140,000,000
EBIT 24,790,000,000 24,710,000,000 23,860,000,000 26,140,000,000 29,410,000,000 28,140,000,000
Net Income 13,350,000,000 12,980,000,000 29,450,000,000 19,370,000,000 13,900,000,000 11,900,000,000
EBITDA 46,830,000,000 50,570,000,000 45,830,000,000 61,260,000,000 55,110,000,000 53,400,000,000
Market Capitalization 149,054,400,000 201,513,840,000 203,544,360,000 174,165,540,000 273,713,000,000 202,208,000,000
Intrinsic Value 312,600,772,000 310,192,761,000 522,407,000,000 353,617,252,870 569,184,000,000 786,467,000,000

Facts:

  • Asset turnover was averaging $0.32 in the trailing twelve months.
  • Return on assets was 2.17 percent in the trailing twelve months.
  • Return on equity was 6.61 percent in the trailing twelve months.
  • Return on invested capital was 4.94 percent in the trailing twelve months.
  • Debt/Equity was a 1.00 ratio in the trailing twelve months.

Explanation:

  • Asset turnover indicates that for every dollar in the asset, the company generated 32 cents of sales.
  • Return on assets indicates that the company generated 02.17 cents of net income for every dollar in assets.
  • Return on equity indicates that the company generated 6.61 cents of net income for every dollar in common shareholders equity.
  • Return on invested capital indicates that the return on its capital investment was 4.94 percent or 4.94 cents.
  • Debt/Equity means that the investors and creditors have an equal stake in the business assets.

Interpretation

Financial ratios show that the company is generating profits for every dollar invested in assets and equity. The debt to equity ratio was not bad, hence investors and creditors have an equal stake in the assets of the company.

4. AT&T FINANCIAL RATIOS

AT&T FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 0.42 0.41 0.38 0.35 0.33 0.32
Return on assets % 3.84 3.22 6.95 3.97 2.57 2.17
Return on equity % 12.77 10.56 22.31 11.92 7.55 6.61
Return on invested capital % 7.70 6.57 12.04 7.74 5.68 4.94
Debt/Equity 0.97 0.92 0.89 0.90 0.94 1.00

Facts:

  • Asset turnover was averaging $0.32 in the trailing twelve months.
  • Return on assets was 2.17 percent in the trailing twelve months.
  • Return on equity was 6.61 percent in the trailing twelve months.
  • Return on invested capital was 4.94 percent in the trailing twelve months.
  • Debt/Equity was a 1.00 ratio in the trailing twelve months.

Explanation:

  • Asset turnover indicates that for every dollar in the asset, the company generated 32 cents of sales.
  • Return on assets indicates that the company generated 02.17 cents of net income for every dollar in assets.
  • Return on equity indicates that the company generated 6.61 cents of net income for every dollar in common shareholders equity.
  • Return on invested capital indicates that the return on its capital investment was 4.94 percent or 4.94 cents.
  • Debt/Equity means that the investors and creditors have an equal stake in the business assets.

Interpretation

Financial ratios show that the company is generating profits for every dollar invested in assets and equity. The debt to equity ratio was not bad, hence investors and creditors have an equal stake in the assets of the company.

 

5. AT&T KEY EXECUTIVE COMPENSATION

AT&T KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Total 19,639,491 24,347,235 30,211,935 45,044,485 56,226,035
John T. Stankey, Director, President, and CEO
Total 10,040,810 12,765,295 10,094,583 16,552,583 22,473,006
Jefrey S. McElfresh, CEO AT&T Communications LLC
Total 7,676,325
John S. Stephens, Senior EVP, Principal Accounting Officer, and CFO
Total 9,598,681 11,581,940 13,892,807 15,642,304 16,725,328
David R. McAfee, Senior EVP, and General Counsel
Total 6,224,545 12,849,276 9,351,376

Facts:

  • The total key executive compensation in 2015 was $19,639,491.
  • The total key executive compensation in 2016 was $24,347,235.
  • Total key executive compensation in 2017 was $30,211,935.
  • Total key executive compensation in 2018 was $45,044,485.
  • Key executive compensation in 2019 was $56,226,035.

Explanation

  • The total key executive compensation represents 0.40 percent of the net income.
  • The total key executive compensation of John T. Stankey, Director, President, and CEO represents 40 percent of the total key executive compensation.
  • Jeffrey S. McElfresh, CEO AT&T Communications LLC compensation represents 14 percent of the total compensation.
  • The compensation of John S. Stephens, Senior EVP, Principal Accounting Officer, and CFO represents 30 percent of the total key executive compensation.
  • David R. McAfee, Senior EVP, and General Counsel compensation represent 17 percent of the total compensation.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation, and other compensation.

 

6. AT&T LOBBYING AND CONTRIBUTIONS

AT&T LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
1998 $13,390,000
1999 $23,290,000
2000 $16,320,000
2001 $16,450,000
2002 $14,660,000
2003 $15,820,000
2004 $21,360,000
2005 $23,440,000
2006 $27,450,000
2007 $16,560,000
2008 $15,080,000
2009 $14,730,000
2010 $15,400,000
2011 $20,230,000
2012 $17,460,000
2013 $15,940,000
2014 $14,200,000
2015 $16,370,000
2016 $16,370,000
2017 $16,780,000
2018 $18,523,000
2019 $12,820,000
2020 $6,250,000

Facts:

From 1998 to the current date, AT&T is incurring lobbying and contributions expenditures to politicians. The annual record shows the above.

Explanation:

A note from OpenSecret.org Center for Responsive Politics quoted below:

“NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on April 22, 2020, and includes spending from January 1 – March 31. Prior years include spending from January through December.”

Interpretation

Lobbying and contributions to politicians vary every cycle; it may increase or decrease in amount depending on the attention given by the federal government on the issues of the company.

 

7. AT&T FINANCIAL STRENGTH

AT&T FINANCIAL STRENGTH

DATA:

Working Capital -14,150,000,000
Total Assets 547,900,000,000
Sales 175,140,000,000
EBIT 28,140,000,000
Market value of equity 204,345,000,000
Book value of total liabilities 354,450,000,000
Retained earnings 13,502,000,000

CALCULATION

Ratio Score Result
A – Working Capital / Total Assets -0.03 1.20 -0.03
B – Retained Earnings / Total Assets 0.02 1.40 0.03
C – EBIT / Total Assets 0.05 3.30 0.17
D – Market Value of Equity / Book Value of Total Liabilities 0.58 0.60 0.35
E – Sales / Total Assets 0.32 1.00 0.32
Z-Score 0.84

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

According to Dr. Altman, a Z-Score of 0 to 1.8 indicates that the company will declare bankruptcy in the future. AT&T suffered negative working capital in the past five years because its current liabilities are higher than the current assets.  The main factors of this statistical measurement are profitability, liquidity, leverage, and efficiency. Visa Inc has strong financial health.

Overview,

The company’s financial strength was not impressive at below a score of 1 which indicates that the company would likely declare bankruptcy in the near future. The score was impacted by the negative working capital due to the debt being higher than its current assets. 

CITATION

https://about.att.com/pages/corporate_profile

http://www.opensecrets.org/orgs/at-t-inc/summary?id=d000000076

https://www.morningstar.com/stocks/xnys/t/quote

Researched and written by Criselda

Note:

Research Reports can be found under the company tab.