Why AT&T Stock Jumped Monday

What happened

Shares of AT&T (NYSE: T) jumped on Monday, rising 4.1% as of 1:05 p.m. EDT.

The stock's gain followed AT&T's third-quarter earnings report. But the rise is likely more a result of management's new three-year outlook, announced alongside its earnings report, than the quarterly financial results themselves.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

For the tech company's third quarter, revenue and adjusted earnings per share came in at $44.6 billion and $0.94, respectively. The analysts' average forecast was for $45 billion in revenue and $0.93 in adjusted EPS.

AT&T also announced a number of important three-year targets and plans, including:

  • 1% to 2% three-year compound average annual revenue growth.
  • A 200-basis-point increase in its adjusted EBITDA margin between 2019 and 2022.
  • Refraining from any major acquisitions.
  • A commitment to pay off 100% of debt from the Time Warner deal.

The exhaustive list of targets includes other items, such as expectations for capital expenditures, free cash flow, and dividends.

"Our three-year plan delivers both substantial and consistent financial improvements over the next three years," CEO Randall Stephenson said in a press release.

Now what

Overall, the three-year outlook highlights expectations for modest top-line growth and significant bottom-line improvement -- encouraging news given that investors were worried about how the company's aggressive investments in streaming would affect consolidated results.

"We grow revenues, EBITDA, and EPS every single year, and free cash flow is stable next year, but then grows in both of the next two years, as well," Stephenson said. "And all of this is inclusive of our investment in HBO Max."

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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