On the surface, AT&T (NYSE: T) may look like a compelling investment. It is one of the largest telecommunications companies in the world, and T stock has a forward price-earnings ratio of under nine. AT&T even has a 6.2% dividend yield, one of the highest among U.S. mega-cap stocks. But a closer look at AT&T reveals a company and a stock that are in a tough spot.
The first place to look when assessing AT&T’s situation is its businesses. First and foremost, AT&T’s DirecTV premium cable TV service is in major trouble. In the first quarter alone, DirecTV lost 661,000 customers,representing an 11% annualized decline. Nearly every business gets hit hard by recessions, but Abeyta, the former hedge-fund manager, says AT&T may be particularly exposed during the next downturn. “In a recession, I think the cord-cutting (especially at high-priced DirecTV) will accelerate like nothing you have ever seen,” he says.
Source: InvestorPlace
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