Could AT&T Be The Value Stock For Your Portfolio?
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AT&T (T) stock trades at 11.6 times earnings, against 21.9 for the median S&P 500 company. Over the past twelve months, the shares lost 6.1%, dividends included, while the S&P 500 gained 12.8%. Either a sound phone and internet business is on sale, or the market has a fair reason to pay less for it. So what does a buyer actually get at that price?
AT&T Buyers Get Strong Margins And Free Cash Flow
A buyer gets a business that turns a large share of its sales into cash. The Communications segment accounts for nearly all of that business, having brought in $121 billion of AT&T’s $126 billion revenue in fiscal 2025. Over the twelve months to September 2026, AT&T recorded an operating margin of 21.4%, against 19.0% for the median S&P 500 company.
Cash forms the stronger part of the case. For every $100 of AT&T’s market value, the company generated about $11.70 of free cash flow over those twelve months. AT&T also bought back $9.3 billion of its stock, and its dividend yields 5.2%.
The profit behind the low multiple did fall, dropping to $13.1 billion in the twelve months to September 2026 from $22.2 billion a year earlier. Yet operating income, the profit from running the business, rose to $27.6 billion from $24.2 billion. In other words, the business itself earned more even as the bottom line shrank.
What Does AT&T Look Like Over Five Years?
Over five years, AT&T has barely grown: revenue was $129 billion in the twelve months to September 2026, against $128 billion five years earlier.
The pickup is recent: revenue grew 3.5% in the latest twelve months, against a 1.9% average over the three twelve-month periods to September 2026. Management said on its October 21, 2026 call that growth comes from its Advanced Connectivity segment, where service revenue grew 6.1% in the third quarter. The call uses different segments from the fiscal 2025 figures above. Service revenue in the older Legacy segment, which is powering down copper-based services, fell about 25% in the third quarter from a year earlier.
Debt remains the risk an owner takes on. At the end of September, AT&T carried total debt of $178 billion, equaling 117.1% of its market value against 19.5% for the S&P 500. The company’s leverage ratio, measuring net debt against adjusted EBITDA, rose to 3.13 times at the end of the third quarter from 2.68 times at the end of the second. Management said this rise reflects the $23 billion of EchoStar spectrum licenses bought at the end of July.
Can AT&T Bring Its Debt Back Down?
Management says it can, and has named a year: it expects the leverage ratio back in the 2.5 times range during 2029. The plan is growth in adjusted EBITDA plus debt repayment from spare cash and from 2027 proceeds of a fiber joint venture and the planned sale of the AT&T Mexico wireless business.
Management’s own measure is growing: adjusted EBITDA rose 5.4% in the third quarter. The cash trend is less clear: as reported, free cash flow was $17.8 billion over the twelve months to September 2026, down from $20.0 billion a year earlier.
At this price, AT&T would be an income holding: a slow-growing business that produces cash and pays a dividend, with debt an owner has to accept. A buyer would be betting less on the market having overlooked a sound business, and more on management bringing the debt down on schedule, while it still targets about $10 billion of share repurchases in 2026. Full-year 2026 free cash flow and the leverage ratio are the numbers to watch when AT&T reports its fourth quarter, expected in January 2027.
Not Sure AT&T Is Worth It At This Price?
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