Shares of AT&T (T 1.02%) were gaining today, even though there was no major news out on the stock. Instead, shares were rising along with rival Verizon (VZ 1.17%), which delivered strong earnings results this morning. AT&T is due to report its fourth-quarter earnings report tomorrow.
While the two companies are close competitors, they're also subject to the same industry and consumer trends, so the stocks tend to move together. As of 12:26 p.m. ET, Verizon stock was up 5.5%, while AT&T gained 2.3%.
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AT&T rides Verizon's tailwinds
Verizon's financial results were mostly in line with expectations, as revenue fell 0.3% to $35.1 billion, ahead of the consensus of $34.5 billion. Adjusted earnings per share fell from $1.19 to $1.08, matching estimates.
While that shows the business is shrinking, underlying key metrics were moving in the right direction. Postpaid phone net additions -- or monthly phone contract payers -- rose 449,000 in the quarter, compared to just 217,000 in the quarter a year ago. Wireless service revenue, its core business, was up 3.2% to $19.4 billion.
Verizon CEO Hans Vestberg said: "2023 was a year of change. We have the right assets and the best team in place and are well-positioned for growth in 2024."
Why it was good news for AT&T
Both AT&T and Verizon have seen their stocks bounce off historic lows in recent months due to macro signals and signs that the telecom giants have put earlier challenges behind them. Both companies have said that capital-expenditure cycles have peaked in 2023, freeing up more cash to return to shareholders in dividends and share buybacks, and the growth in postpaid subscribers is also a promising sign.
We'll learn more when AT&T reports earnings tomorrow. Analysts are expecting revenue to have grown 0.4% to $31.5 billion and for adjusted earnings per share to fall from $0.61 to $0.56.
