Is the AT&T stock a good buy after strong earnings?

The AT&T (NYSE: T) stock price tilted upwards on Thursday after the company published strong quarterly results. The shares rose to a high of $19.43, which was the highest it has been since January 26th this year. 

AT&T strong earnings

AT&T has been undergoing changes in the past few months. This month, the firm completed its media business spinoff. Its Time Warner business merged with Discovery to form Warner Bros. Discovery, a firm that is now valued at over $60 billion. It also decided to cut its dividends for the first time in years and partially exited its DirecTV business.

AT&T published strong quarterly results as it moved back to its Ma Bell roots. The firm said that it added 691k regular phone subscribers, which was a better figure than what analysts were expecting. The company’s HBO business added 3 million new subscribers, bringing the total to over 78.6 million. Its American users rose to 48.6 million.

AT&T said that its total debt rose to over $162 billion in the first quarter although it expects to receive $40 billion from the new media company. It expects to use most of these funds to pay debt.

So, is the leaner AT&T a good stock for long term investors? The company’s core business is doing well as its standalone revenue rose by 2.5% to $29.5 billion. Its free cash flow of $2.9 billion while wireless churn has reduced substantially in the past few months.

While AT&T slashed its dividends, it is a safe company that offers substantial returns. It has a trailing twelve month dividend yield of 7% and a forward yield of 5.71%. This is still above average return for a company that has a payout ratio of 61%. Therefore, while AT&T is not a good investment for growth investors, it offers strong returns for income shareholders.

AT&T stock price forecast

The daily chart shows that the T stock price has been in a strong bullish trend in the past few weeks. The shares are approaching the key resistance level at $20.47, which was the highest point this year. It has moved above the 25-day and 50-day moving averages while the Relative Strength Index is approaching the resistance at 70. Therefore, the shares will likely keep rising in the coming weeks.