Back in April, AT&T completed its spinoff of Warner Bros. Discovery , which merged its former Time Warner (WarnerMedia) assets with Discovery. That spinoff marked the bitter end of AT&T's disastrous, debt-fueled expansion of its pay TV and media businesses, which included its acquisitions of DirecTV in 2015, Time Warner in 2018, and numerous smaller media companies.
AT&T spun off DirecTV last year, divested many of its minor media assets, and finally agreed to spin off WarnerMedia. All of those moves were aimed at streamlining its business, reducing its long-term debt, and enabling it to focus on the growth of its core telecom businesses again.
AT&T expects its revenue to rise by the low single digits in both 2022 and 2023. It also expects its adjusted earnings per share (EPS) to come in between flat and 2% higher in 2022 and rise 2% to 7% in 2023. As a more streamlined company, this new AT&T plans to reduce its ratio of net debt to adjusted EBITDA from a "peak" of 3.1 at the beginning of 2021 to 2.5 by the end of 2023.
Those growth rates might seem anemic, but they'll make AT&T a lot more comparable to Verizon and other blue chip stalwarts. AT&T significantly reduced its dividend after the spinoff, but it still pays a respectable forward yield of 5.3% and trades at less than 8 times forward earnings.
AT&T's high yield and low valuation could make it a top safe-haven stock as nervous investors shun the market's frothier growth stocks. As a result, it could actually rally and outperform the market this year.
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