Why Does AT&T Stock Cost Less Than A Slower-Growing Verizon?
AT&T (T) grew revenue 2.6% vs. Verizon's 1.4% in the past year, both with ~20% margins. AT&T trades at 8.2x earnings, lower than Verizon's 12.4x. AT&T's growth comes from fiber and wireless, with 42.5% of home internet customers also having wireless. Management increased buybacks to $10B for 2026, aiming to reduce debt. Verizon's stock returned 16.2% vs. AT&T's -10.0% over the past year, but AT&T's stock is up 16.9% in the past three months.
How this was made
The 30-second read
Why it matters
The disclosed buyback increase and cash‑flow guidance provide fresh material for valuation models.
Market read
AT&T's expanded buyback and cash‑flow outlook could influence its stock trajectory and sector peers.
What to watch
Potential near‑term pressure from flat fiber ARPU and legacy copper shutdown costs.
Background
AT&T compares its growth and valuation to Verizon, highlighting a valuation gap despite higher revenue growth.
Ticker impact
AT&T announced a $10 billion buyback for 2026, up from an $8 billion plan, and provided free‑cash‑flow guidance of $18 billion for 2026.
Potential short‑term upside as investors price in the increased return of capital.
Buyback expansion is a concrete, time‑sensitive catalyst that can attract demand.
Market effects
Telecom sector may see renewed focus on cash‑return strategies.
U.S. large‑cap telecom stocks could experience modest re‑rating.
Limited to investors tracking major U.S. dividend‑paying stocks.
Counterpoint
The buyback may be insufficient if debt remains high and fiber revenue per user stalls.
Key entities
- companyAT&T
U.S. telecom giant (ticker T).
- companyVerizon
U.S. telecom competitor (ticker VZ).
