AT&T Inc. T is scheduled to report second-quarter 2026 earnings on July 22, before the opening bell. The Zacks Consensus Estimate for revenues and earnings is pegged at $32.04 billion and 59 cents per share, respectively. The earnings estimate for AT&T for 2026 has increased 0.43% to $2.32 per share over the past 60 days, while the same for 2027 has increased 0.79% to $2.55 per share.
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Earnings Surprise History
The communications service provider delivered a trailing four-quarter earnings surprise of 5.19%, on average.
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Earnings Whispers
Our proven model predicts a likely earnings beat for AT&T for the second 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 +4.83% and a Zacks Rank #3.
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Factors Shaping the Upcoming Results
During the quarter, AT&T strengthened its enterprise connectivity portfolio with several strategic initiatives. The company launched North America's first Post-Quantum Cryptography (PQC)-enabled Software-Defined Wide Area Network (SD-WAN) service in collaboration with Cisco. The solution is designed to help enterprises protect sensitive data against emerging quantum computing-related cyber threats.
The company also expanded its connected vehicle ecosystem by extending its collaboration with Cisco and LiveOne. The enhanced Connected Car platform integrates in-vehicle connectivity with digital entertainment services. Such innovative product launches are expected to have a positive impact on upcoming results.
In the to be reported quarter, the company continued to expand its consumer connectivity offerings by introducing the Unlimited Day Pass for eligible iPad users. The on-demand service provides flexible wireless connectivity without requiring a long-term subscription.
AT&T also reaffirmed its long-term commitment to fiber and wireless expansion by announcing a $19 billion investment in California through 2030. The initiative aims to extend fiber connectivity to more than 4 million additional households and businesses.
However, AT&T continues to face intense competition in the U.S. telecom market from Verizon Communications, Inc. VZ and Charter Communications CHTR. This could limit subscriber additions and weigh on revenue growth.
Price Performance
Over the past year, AT&T has declined 17.5% against the industry’s growth of 83.2%, outperforming its peers like Charter but underperforming Verizon. Charter has declined 65%, while Verizon has improved 8.8% 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 9.03 forward earnings, lower than 44.18 for the industry and the stock’s mean of 11.4
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Investment Considerations
AT&T is aggressively expanding its fiber footprint. The company has reached more than 37 million fiber locations, the highest in America. It is aiming to expand this footprint to more than 60 million locations by the end of the decade. Fiber is emerging as a critical component for AI native connectivity, cloud applications, streaming, gaming, enterprise workloads and next-generation digital experiences. Amid this backdrop, AT&T’s continuous investment in developing a robust fiber architecture nationwide will likely bring long-term benefits.
However, the U.S. telecom market is highly competitive. Major rivals like Verizon and Charter are also aggressively investing in fiber, fixed wireless access, and customer acquisition. T must continue offering attractive pricing, bundled services and network improvements to maintain subscriber growth. In the wireless domain, T-Mobile is also rapidly expanding its 5G network. This could pose a threat to AT&T’s wireless subscriber growth.
It has been implementing several initiatives to drive customer retention over the past several quarters. Its convergence strategy has become one of the central pillars of these retention efforts. The company is focused on increasing the number of households that subscribe to both AT&T wireless and broadband services, including AT&T Fiber and AT&T Internet Air.
When customers get dependent on multiple services from a single vendor, it becomes difficult for them to change service providers. From a user’s point of view, opting for fiber and wireless services from a single vendor reduces complexity for them as well. This trend improves customer retention, lowers churn and increases long-term customer value.
AT&T continues to experience steep declines in legacy wireline and copper-based services as customers migrate to newer technologies. The company's long-term growth story relies on massive investments in fiber and wireless infrastructure. It is accelerating fiber deployment, investing $19 billion in California alone through 2030, which places pressure on free cash flow.
End Note
AT&T continues to invest in fiber and 5G to expand advanced Internet reach and drive more households to buy wireless and home Internet together. Management expects fiber reach to grow by about 8 million locations in 2026, including over 4 million locations acquired from Lumen, and remains on track to reach over 40 million total fiber locations by the end of 2026. The effort of portfolio expansion and venture into new high-growth markets, such as network security and automotive, is a positive.
However, the U.S. wireless market remains saturated. This makes the market highly price sensitive and limits average revenue per user growth. Amid stiff competition from other major players, the company has to continuously invest in network upgrades and improve customer experience to maintain its market share, which impacts profitability. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution.
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This article originally published on Zacks Investment Research (zacks.com).