Wall Street anticipates that the Dow Jones member will earn $0.50 per share for the quarter, which is $0.06 better than last year's $0.44 per share. iStock expects the phone company to surpass Wall Street's consensus number. The iEstimate is $0.51; a penny above the street's outlook; although, we do think there could be downside risk to our EPS estimate.
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AT&T provides telecommunications services to consumers, businesses, and other providers in the United States and internationally. The company operates in three segments: Wireless, Wireline (U-verse), and Other.
T's actual results haven't wandered to far from Wall Street's consensus earnings estimates. The range of EPS surprises for the last 16 quarters is from three cents less to four cents more than expectations. AT&T delivered eight bullish surprises averaging 4.07%, five on-consensus results, and three bearish surprises for the last 16 quarterly checkups.
Now, here is the reason why we think Tuesday's report could miss to the downside. AT&T has only produced one bullish surprise of one penny for the last foe Q4 announcements. On the flip side, the Granite month accounted for two of the three EPS shortfalls. For those keeping score, that means the remaining January report was on-target.
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Fortunately for AT&T earnings traders and shareholders, the stock has followed the direction of the surprise for the January profit update. In the three days surrounding EPS, the two misses saw the stock price slip -6.38% and -2.33% while the price held firm for the on-target result and gained 1.85% for the lone plus result.
Let's go to Google Trends to see if we can make an educated guess on which side of the tape earnings will land.
Since the wireless business accounts for 54% or revenue and 100% of last quarter's sales growth, we'll start there. Year-over-year (YoY) queries for "AT&T Wireless" are down sharply (-27%); however, up (6%) somewhat quarter-over-quarter (QoQ). It's been our experience that the latest data tend to be more reliable, but we cannot ignore the YoY results. As for "U-verse," we see a YoY decline of 8% and QoQ slip of 18%.
Based on our interpretation of Google Trends results, we estimate revenue of $32.27 billion, which is lower than the street view of $33.06 billion. Using Wall Street's expected Q4 net margin of 7.97%, we arrive at EPS of $0.49 per share and right on the iEstimate.
Overall: Google Trends, the iEstimate, and AT&T Inc.'s (NYSE:T) January history suggests a small miss is coming Tuesday afternoon. If that's the case, then T's EPS-driven price-response for the Granite month could have the stock dialing up losses.
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