AT&T raised its 2026 share repurchase plan to about $10 billion from $8 billion after second-quarter adjusted earnings per share rose to $0.65 from $0.54. Revenue grew 2.3% to $31.6 billion, and the stock closed Friday at $24.13, about 19% below its 52-week high.
AT&T lifted its 2026 buyback plan to about $10 billion from $8 billion alongside its second-quarter report, delivered on Wednesday, July 22. The stock closed Friday at $24.13 after a 5.1% gain in the session, still about 19% below its 52-week high of $29.79, and yielding 4.6%.
Profits moved faster than revenue
Second-quarter revenue rose 2.3% year over year to $31.6 billion. Underneath that figure, however, the profit lines moved considerably faster.
Adjusted earnings per share came in at $0.65, up from $0.54 a year earlier, growth of about 20% year over year. Diluted earnings per share from continuing operations rose to $0.66 from $0.62, and adjusted EBITDA margin expanded 110 basis points to 39.1%. Free cash flow, the figure that pays the dividend, reached $4.7 billion in the quarter, up from $4.4 billion in the year-ago period.
The operating detail behind it is better than the revenue growth rate suggests. AT&T added 432,000 postpaid phone subscribers and 646,000 internet customers, split between 367,000 fiber and 279,000 fixed wireless. Fiber now passes 38.6 million locations, up by a million in three months.
Dividend and buyback consume the cash flow
AT&T pays $1.11 per share annually across about 6.9 billion shares, or about $7.6 billion of dividends. Add the roughly $10 billion of repurchases management now plans, and the company intends to hand shareholders somewhere near $18 billion this year — against 2026 free cash flow guidance of at least $18 billion.
The multi-year outlook suggests there could be greater breathing room later. Management guided for free cash flow above $19 billion in 2027 and above $21 billion in 2028, against a commitment to return more than $45 billion to shareholders across the three years.
Leverage climbs before it falls
Net debt stood at $126.4 billion at quarter’s end, or 2.68 times adjusted EBITDA. Management expects that ratio to climb to about 3.2 times once its transaction with EchoStar closes, then work back toward 2.5 times over about three years.
Valuation frames the trade-off. The stock trades at about eight times earnings, though the sharper comparison uses the $2.25 to $2.35 in adjusted earnings per share management guided to for 2026, which puts shares closer to 10 times. That 4.6% yield sits at a company growing revenue 2% a year.
CEO John Stankey said the accelerated repurchase reflects a gap between the company’s operating fundamentals and how the market values the shares.
Source: The Motley Fool
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