Should You Buy AT&T Stock At This Price?

Shares of AT&T (T) trade at just 7.2 times earnings, compared with 22.3 for the median S&P 500 company. The stock lost 8.8% over the past twelve months, trailing a broader S&P 500 that returned 17.3%. Investors are looking at either a deeply discounted business or a fair valuation for a stagnant operation. So what does AT&T earn behind that low price?

AT&T Earns A Higher Margin Than Most Companies

The telecommunications provider retained 20.6% of its sales as operating profit over the last twelve months. The median S&P 500 company kept 18.5%. Phone and internet services generate nearly all of those sales, with the Communications segment making up 96% of fiscal 2025 revenue.

The valuation multiple looks similarly compressed relative to cash flow. AT&T trades at 3.9 times its operating cash flow, compared with 14.7 for the S&P 500, and the company hands a good part of that cash back. Over the last twelve months, AT&T spent $8.0 billion on dividends and directed the same amount toward buybacks. Each of those figures equals 5.1% of its market value.

How Does AT&T’s Latest Year Compare With Earlier Years?

Net profit significantly improved during the latest year, anchoring the current P/E calculation. AT&T reported net income at 16.9% of sales over the last twelve months, well above a three-year average of 10.8%. Operating margin hardly moved, registering at 20.6% against a three-year average of 20.2%. Most of the net income increase appears to have come from outside the day-to-day business. Calculating a P/E on an unusually strong year can flatter a stock.

Top-line growth remains slow. Revenue grew 2.6% over the last twelve months, pacing slightly ahead of a 1.6% three-year average. The median S&P 500 company grew 8.3% over the same twelve months. AT&T is still winding down its copper-based services, and the legacy segment is shrinking. Service revenue in that unit fell 26% in the second quarter of 2026 from a year earlier.

AT&T Is Replacing Copper With Fiber

AT&T delivers home internet over its fiber lines, frequently selling the product to households that already pay for its wireless service. During a July call, management called 2026 its largest year ever for fiber expansion, outlining plans to reach 8 million new locations. More than 4 million of those sites were acquired from Lumen.

AT&T houses its newer services under the Advanced Connectivity segment, a division that brings in over 90% of its service revenue. Service revenue for the unit grew 5.1% in the second quarter of 2026, and management expects 5% or more for the full year. Management also reported the company is on pace for $4 billion of annual cost savings by the end of 2028.

What Would You Be Betting On With AT&T Stock?

Buying the stock requires a bet that the broader market has mispriced a steady business, and that AT&T can stretch its cash far enough to satisfy both shareholders and lenders at once. The P/E ignores debt entirely. AT&T carries debt equal to 104.3% of its market value, compared with 20.6% for the S&P 500.

In July, management raised its 2026 buyback plan to about $10 billion from $8 billion, pulling forward repurchases initially planned through 2028. Buybacks and dividends will total about $18 billion in 2026, a figure management said is essentially 100% of its free cash flow outlook. AT&T completed its EchoStar spectrum purchase on July 28. Management had said net debt would rise to about 3.2 times adjusted EBITDA after that close, up from 2.68 times at the end of the second quarter.

Advanced Connectivity grew at management’s full-year pace during the second quarter, but those payouts leave AT&T with little remaining free cash flow. When the company issues its next quarterly report, free cash flow against management’s full-year outlook of $18 billion or more is the critical number to watch.

Does This Mean You Should Act On T?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.