AT&T Inc. T is scheduled to report third-quarter 2026 earnings on Oct. 21, before the opening bell. The Zacks Consensus Estimate for revenues and earnings is pegged at $31.68 billion and 61 cents per share, respectively. The earnings estimate for AT&T for 2026 has decreased 0.43% to $2.33 per share over the past 60 days, while the same for 2027 has decreased 1.17% to $2.54 per share.
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Earnings Surprise History
The communications service provider delivered a trailing four-quarter earnings surprise of 6.26%, on average.
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Earnings Whispers
Our proven model predicts a likely earnings beat for AT&T for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here. AT&T currently has an ESP of +3.77% and a Zacks Rank #3.
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Factors Shaping the Upcoming Results
During the quarter, AT&T introduced AT&T Video Intelligence with EdgeVis Cloud, a managed cloud deployment option that expands its existing IoT Video Intelligence platform. The offering combines optimized video streaming, secure transmission, analytics and alerting with an AT&T-managed cloud backend. It is designed to simplify deployment and reduce infrastructure requirements for enterprise, mid-market, large SMB and public-sector customers. Potential applications include construction sites, transportation corridors, utility operations, logistics yards, retail locations, smart-city pilots and emergency response sites.
In the quarter under review, AT&T announced that Ericsson will provide 600 MHz dual-band radios to support deployment of spectrum acquired from EchoStar. AT&T said the new spectrum and radios will improve network capacity, coverage, reliability and performance, including in indoor and rural locations. The company is more than 60% through its wireless network modernization program. In upgraded areas, customers can see up to 2X higher average speeds, a 10% reduction in dropped and blocked calls, and up to a 70% reduction in slower data speeds.
AT&T and Corning also inked a multi-year agreement worth more than $3 billion, under which Corning will supply the fiber-optic cables. The materials will enable AT&T to expand its high-speed internet network across the United States.
However, AT&T continues to face intense competition in the U.S. telecom market from Verizon Communications, Inc. VZ and T-Mobile, US, Inc. TMUS. This could impact subscriber growth and impact revenue.
Price Performance
Over the past year, AT&T has declined 13.3% against the industry’s growth of 122.7%, outperforming its peers like T-Mobile but underperforming Verizon. T-Mobile has declined 34%, while Verizon has improved 4.8% during this period.
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Key Valuation Metric
From a valuation standpoint, AT&T appears to be trading relatively cheaper than the industry and below its mean. Going by the price/earnings ratio, the company shares currently trade at 8.89 forward earnings, lower than 36.25 for the industry and the stock’s mean of 10.74.
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Investment Considerations
T continues to benefit from its fiber-led growth strategy and efforts to increase customer adoption of bundled connectivity services. AT&T had expanded its fiber footprint to 38.6 million locations by the end of the second quarter and aims to exceed 40 million locations by year-end 2026. Continued fiber deployment and the integration of Lumen’s acquired mass-market fiber customer base could support broadband growth. This may also encourage more households to purchase wireless and Internet services together. Its bundled offerings is improving customer retention and strengthen long-term revenue visibility.
However, intense competition in the U.S. wireless market remains a challenge for AT&T. Although wireless service revenues increased 3.3% year over year in the second quarter, promotional discounts partially offset the benefits of pricing actions. Persistent competition from major telecom operators could require continued spending on customer acquisition and retention, limiting revenue gains per subscriber.
End Note
AT&T continues to invest in fiber and fixed wireless to expand advanced Internet reach and deepen household convergence with wireless. Focus on 5G network upgradation worldwide will likely bring long term benefits. Strategy of bundled product offerings by combining wireless and broadband is driving retention. However, However, aggressive competition in wireless services, declining legacy revenues and substantial capital requirements remain key challenges. AT&T’s balance sheet remains leveraged while investment, spectrum needs and shareholder returns compete for cash. With a Zacks Rank #3 (Hold), AT&T presents a balanced outlook ahead of its third-quarter earnings report, making execution on its fiber-led growth strategy and cash flow targets important factors for investors to monitor.
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This article originally published on Zacks Investment Research (zacks.com).