Shares of the telecommunications giant AT&T (T 1.29%) popped this morning after the company released second-quarter results showing strong subscriber growth and impressive free cash flow.
AT&T's stock was up 4.9% as of 11:56 a.m. EDT.
New subscribers and rising free cash flow
AT&T's earnings and revenue were nothing to write home about this quarter. Sales fell slightly to $29.8 billion and were below analysts' consensus estimate of $30.1 billion.
NYSE: T
Key Data Points
Earnings weren't impressive either, with AT&T's non-GAAP (adjusted) earnings per share of $0.57 falling 9% from the year-ago quarter. That missed Wall Street's average estimate of $0.58 for the quarter.
However, investors were content to look past revenue and earnings this quarter and focus instead on AT&T's subscriber growth and rising free cash flow (FCF).
AT&T added 419,000 wireless subscribers in Q2, smashing expectations of about 285,000 new subscribers. The company noted in its press release that it continues to attract and retain high-value subscribers who sign up for both wireless and fiber services. AT&T CEO John Stankey said in prepared remarks: "AT&T is leading the way in converged connectivity as customers increasingly seek one provider who can seamlessly connect them in their home, at work and on the go. This is proving to be a winning strategy."
AT&T shareholders were also happy to see the company's FCF increase 9.5% to $4.6 billion, ahead of analysts' consensus estimate of $4.2 billion.
AT&T anticipates a strong finish
AT&T's management estimates FCF will be between $17 billion and $18 billion for 2024, an increase from $16.8 billion from last year.
Strong FCF growth in Q2 will help AT&T get closer to that goal and boost investor optimism that the company is in a strong financial position to continue paying its dividend.
With its rising FCF and increasing subscribers, it's not surprising why investors feel good about AT&T's stock right now.
