The Most Interesting Takeaways From The AT&T Q3 Earnings Call

Shares of AT&T Inc. T were trading lower by more than 3 percent on Wednesday, as several aspects of the company's earnings report point to a less-than-encouraging trend for the company moving forward. UBS' John Hodulik maintains a Neutral rating on AT&T's stock with an unchanged $39 price target. The stock looks cheap on a valuation basis, but the outlook remains difficult, Hodulik said. (See Hodulik's track record here.) 

Here's Hodulik's takeaways from the earnings report and conference call:

• The reported financial metrics were "light", highlighted by an EBITDA miss and in-line EPS.
• EBITDA declines were seen across all segments, including wireless, entertainment, business solutions, and international.
• Traditional video subscriber losses were skewed towards the higher-value DTV satellite subscriber group.
• The wireless segment was in-line, as low volumes drove lower postpaid phone churn and higher margins.

Looking forward, AT&T is expected to see continued pressure on traditional video subscribes as video streaming matures, Hodulik said. Tthe analyst is now modeling subscriber declines of 5 percent in the fourth quarter that will then worsen to 8 percent declines in 2018.

AT&T's stock is trading at a multiple that implies a 35 percent discount to the S&P 500 index, which does make the stock "cheap on a historical basis," Hodulik said. AT&T is also seeing deteriorated fundamentals in the entertainment segment and its overall outlook remains "difficult," the analyst said. 

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Photo courtesy of AT&T.