TBB
AT&T Inc. 5.35% GLB NTS 66
$20.04
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 52.4% below fair value
You pay
$20.04
Bear
$33.66
Fair
$42.08
Bull
$50.50
Bear
$33.66
+68.0%
$3.11 × 12x P/E
Fair
$42.08
+110.0%
$3.11 × 15x P/E
Bull
$50.50
+152.0%
$3.11 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
6.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $21.29 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $42.08 per share.
Warnings
Dividend-based valuation: $19.30 (below our primary estimate by 59%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $21.29 (from 9 analysts). Our estimate is 122% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples