Stock Analysis on Net

AT&T Inc. (NYSE:T)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

AT&T Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1 18,826 22,742 1,500 32,698 4,489
Cost of capital2 8.38% 7.20% 7.51% 6.92% 7.58%
Invested capital3 314,065 326,144 309,447 439,195 412,041
 
Economic profit4 (7,480) (733) (21,741) 2,319 (26,733)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 18,8268.38% × 314,065 = -7,480

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. AT&T Inc. economic profit increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.

Net Operating Profit after Taxes (NOPAT)

AT&T Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income (loss) attributable to AT&T 10,948 14,400 (8,524) 20,081 (5,176)
Deferred income tax expense (benefit)1 749 1,456 3,074 5,504 1,245
Increase (decrease) in allowance for credit loss2 (124) (89) (70) (450) (14)
Increase (decrease) in equity equivalents3 625 1,367 3,004 5,054 1,231
Interest expense 6,759 6,704 6,108 6,884 7,925
Interest expense, operating lease liability4 942 865 822 924 1,055
Adjusted interest expense 7,701 7,569 6,930 7,808 8,980
Tax benefit of interest expense5 (1,617) (1,589) (1,455) (1,640) (1,886)
Adjusted interest expense, after taxes6 6,083 5,979 5,474 6,168 7,094
(Gain) loss on marketable securities 40 15 11 (4) (20)
Interest income (212) (303) (143)
Investment income, before taxes (172) (288) (132) (4) (20)
Tax expense (benefit) of investment income7 36 60 28 1 4
Investment income, after taxes8 (136) (228) (104) (3) (16)
(Income) loss from discontinued operations, net of tax9 181
Net income (loss) attributable to noncontrolling interest 1,305 1,223 1,469 1,398 1,355
Net operating profit after taxes (NOPAT) 18,826 22,742 1,500 32,698 4,489

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit loss.

3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AT&T.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 20,924 × 4.50% = 942

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 7,701 × 21.00% = 1,617

6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 172 × 21.00% = 36

8 Elimination of after taxes investment income.

9 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. AT&T Inc. NOPAT increased from 2022 to 2023 but then slightly decreased from 2023 to 2024.

Cash Operating Taxes

AT&T Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income tax expense 4,445 4,225 3,780 5,468 965
Less: Deferred income tax expense (benefit) 749 1,456 3,074 5,504 1,245
Add: Tax savings from interest expense 1,617 1,589 1,455 1,640 1,886
Less: Tax imposed on investment income 36 60 28 1 4
Cash operating taxes 5,277 4,298 2,134 1,603 1,602

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. AT&T Inc. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

AT&T Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Debt maturing within one year 5,089 9,477 7,467 24,630 3,470
Long-term debt, excluding maturing within one year 118,443 127,854 128,423 152,724 153,775
Operating lease liability1 20,924 21,092 22,206 24,967 25,739
Total reported debt & leases 144,456 158,423 158,096 202,321 182,984
Stockholders’ equity attributable to AT&T 104,372 103,297 97,500 166,332 161,673
Net deferred tax (assets) liabilities2 58,859 58,583 56,946 64,996 60,274
Allowance for credit loss3 375 499 588 771 1,221
Equity equivalents4 59,234 59,082 57,534 65,767 61,495
Accumulated other comprehensive (income) loss, net of tax5 (795) (2,300) (2,766) (3,529) (4,330)
Redeemable noncontrolling interest 1,980 1,973
Noncontrolling interest 13,873 14,145 8,957 17,523 17,567
Adjusted stockholders’ equity attributable to AT&T 178,664 176,197 161,225 246,093 236,405
Under construction6 (7,452) (5,640) (7,182) (5,845) (4,099)
Investment securities7 (1,603) (2,836) (2,692) (3,374) (3,249)
Invested capital 314,065 326,144 309,447 439,195 412,041

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to stockholders’ equity attributable to AT&T.

5 Removal of accumulated other comprehensive income.

6 Subtraction of under construction.

7 Subtraction of investment securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. AT&T Inc. invested capital increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Cost of Capital

AT&T Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 182,039 182,039 ÷ 320,946 = 0.57 0.57 × 12.19% = 6.91%
5.000% Perpetual Preferred Stock, Series A 1,010 1,010 ÷ 320,946 = 0.00 0.00 × 5.00% = 0.02%
4.750% Perpetual Preferred Stock, Series C 1,390 1,390 ÷ 320,946 = 0.00 0.00 × 4.75% = 0.02%
Debt3 115,583 115,583 ÷ 320,946 = 0.36 0.36 × 4.20% × (1 – 21.00%) = 1.19%
Operating lease liability4 20,924 20,924 ÷ 320,946 = 0.07 0.07 × 4.50% × (1 – 21.00%) = 0.23%
Total: 320,946 1.00 8.38%

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 120,167 120,167 ÷ 276,051 = 0.44 0.44 × 12.19% = 5.31%
5.000% Perpetual Preferred Stock, Series A 1,008 1,008 ÷ 276,051 = 0.00 0.00 × 5.00% = 0.02%
4.750% Perpetual Preferred Stock, Series C 1,381 1,381 ÷ 276,051 = 0.01 0.01 × 4.75% = 0.02%
Debt3 132,403 132,403 ÷ 276,051 = 0.48 0.48 × 4.23% × (1 – 21.00%) = 1.60%
Operating lease liability4 21,092 21,092 ÷ 276,051 = 0.08 0.08 × 4.10% × (1 – 21.00%) = 0.25%
Total: 276,051 1.00 7.20%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 137,321 137,321 ÷ 286,836 = 0.48 0.48 × 12.19% = 5.83%
5.000% Perpetual Preferred Stock, Series A 881 881 ÷ 286,836 = 0.00 0.00 × 5.00% = 0.02%
4.750% Perpetual Preferred Stock, Series C 1,221 1,221 ÷ 286,836 = 0.00 0.00 × 4.75% = 0.02%
Debt3 125,207 125,207 ÷ 286,836 = 0.44 0.44 × 4.10% × (1 – 21.00%) = 1.41%
Operating lease liability4 22,206 22,206 ÷ 286,836 = 0.08 0.08 × 3.70% × (1 – 21.00%) = 0.23%
Total: 286,836 1.00 7.51%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 171,001 171,001 ÷ 402,190 = 0.43 0.43 × 12.19% = 5.18%
5.000% Perpetual Preferred Stock, Series A 1,286 1,286 ÷ 402,190 = 0.00 0.00 × 5.00% = 0.02%
4.750% Perpetual Preferred Stock, Series C 1,838 1,838 ÷ 402,190 = 0.00 0.00 × 4.75% = 0.02%
Debt3 203,098 203,098 ÷ 402,190 = 0.50 0.50 × 3.80% × (1 – 21.00%) = 1.52%
Operating lease liability4 24,967 24,967 ÷ 402,190 = 0.06 0.06 × 3.70% × (1 – 21.00%) = 0.18%
Total: 402,190 1.00 6.92%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 204,182 204,182 ÷ 422,357 = 0.48 0.48 × 12.19% = 5.89%
5.000% Perpetual Preferred Stock, Series A 1,303 1,303 ÷ 422,357 = 0.00 0.00 × 5.00% = 0.02%
4.750% Perpetual Preferred Stock, Series C 1,873 1,873 ÷ 422,357 = 0.00 0.00 × 4.75% = 0.02%
Debt3 189,260 189,260 ÷ 422,357 = 0.45 0.45 × 4.10% × (1 – 21.00%) = 1.45%
Operating lease liability4 25,739 25,739 ÷ 422,357 = 0.06 0.06 × 4.10% × (1 – 21.00%) = 0.20%
Total: 422,357 1.00 7.58%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

AT&T Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (7,480) (733) (21,741) 2,319 (26,733)
Invested capital2 314,065 326,144 309,447 439,195 412,041
Performance Ratio
Economic spread ratio3 -2.38% -0.22% -7.03% 0.53% -6.49%
Benchmarks
Economic Spread Ratio, Competitors4
T-Mobile US Inc. 1.49% -0.15% -3.92% -3.86% -3.33%
Verizon Communications Inc. 0.58% -0.99% 2.04% 2.79% 2.15%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -7,480 ÷ 314,065 = -2.38%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. AT&T Inc. economic spread ratio improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024.

Economic Profit Margin

AT&T Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (7,480) (733) (21,741) 2,319 (26,733)
Operating revenues 122,336 122,428 120,741 168,864 171,760
Performance Ratio
Economic profit margin2 -6.11% -0.60% -18.01% 1.37% -15.56%
Benchmarks
Economic Profit Margin, Competitors3
T-Mobile US Inc. 3.42% -0.35% -9.18% -8.90% -8.60%
Verizon Communications Inc. 1.33% -2.24% 4.50% 6.05% 4.16%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenues
= 100 × -7,480 ÷ 122,336 = -6.11%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. AT&T Inc. economic profit margin improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024.