AT&T's Turnaround Worked — That May Be the Problem

The restructuring is behind it. The dividend is rebuilt. The crowd may have already reflected the story.

There was a time, not long ago, when AT&T was the stock investors loved to criticize.

The bloated media acquisition. The dividend cut that broke a decades-long streak of payouts. The balance sheet that looked like it belonged to a different era of corporate ambition. For income investors in particular, AT&T became a cautionary tale — the blue chip that forgot what made it blue.

And then, methodically, the company fixed it.

The media assets were divested. The balance sheet was restructured. The dividend — though reduced — was rebuilt on more sustainable footing. The business was streamlined back to its core: connectivity, fiber, and wireless. AT&T became what it should have been all along — a focused telecommunications company without the distractions.

That turnaround has been real. And the stock has reflected it.

From its 2023 low near $13.50, AT&T has more than doubled. Investors who bought the despair were rewarded. The narrative shifted from broken to recovering, and eventually from recovering to recovered.

That is precisely where the conversation gets more nuanced.

Lyn Alden frames the current picture with characteristic crispness:

"AT&T has cleaned up some of its problems that led to underperformance relative to Verizon, and is a more streamlined company now. That being said, the good news has largely reflected in its share price already, so it doesn't offer the same value and yield that it did before. I have a constructive view on T, but there are other dividend growers that offer superior yield+growth profiles."

The FAST Graph supports that assessment visually. AT&T now trades at a blended P/E of roughly 12x against a normal ratio of about 11.9x — essentially at fair value. The dividend yield, once north of 7% during the depths of the selloff, has compressed to approximately 4.3% as the stock has appreciated. Earnings growth remains modest at 3.5% annually. The stock is no longer cheap. It is no longer broken. It is fairly priced for what it currently delivers.

And that is the paradox embedded in every successful turnaround. The very process of fixing the problems removes the catalyst that made the stock attractive in the first place. The discount closes. The yield compresses. The narrative shifts from opportunity to hold.

The question is whether the chart has one more leg to give — or whether the advance has already said everything it came to say.

Sentiment Speaks

This is where we can view the structure of price painted on the chart to observe crowd behavior in motion. These waves and smaller subwaves will display variable self-similarity at all degrees of the structure. It is this repeating pattern from small to large that gives the analysis its power.

You can see on Zac’s chart that the low struck back in 2023 is likely a long-term trough. That was a washout in sentiment. What we have next appears to be near completing 5 waves up. However, there is a fly in the ointment.

Price has not yet exceeded that last high at the $30 area. There are a few possibilities at this time. First, (T) may be forming an ending diagonal for the fifth wave up. Once complete, price would likely retrace sharply from the $36-$40 area back down to $23-$25. Or, something else could be playing out. 

This advance may just be three waves up. If so, then it is more probable to be an ‘a’ wave of sorts with the ensuing ‘b’ wave pullback to reach down perhaps some 50% of the rally, or the $18-$20 area. 

How will we know? Should price break the $23 area before the prior high at $30 is exceeded, then this is either a truncated fifth (read bearish), or the ‘a’ wave scenario mentioned above — also near term bearish. 

So what would we need to see to anticipate higher in the near term instead? If this is an ending diagonal for a smaller fifth inside the larger potential five up, then price should hold $24 and move to $27-$29 next. 

Conclusion

AT&T did the hard work. It shed the weight, rebuilt the dividend, and gave investors a reason to come back. The stock has rewarded that effort handsomely — more than doubling from its 2023 low.

But turnarounds carry their own expiration. The crowd that bought the despair has been replaced by a crowd that bought the recovery. And recovery, once fully reflected, no longer drives price the way it did on the way up.

The structure of price will resolve what the fundamental picture alone cannot. Either the advance has one more leg to deliver — or it has already exhausted itself trying. The levels are defined. The paths are clear. What AT&T does from here belongs to the crowd.

The turnaround worked. Whether the stock has finished saying so for now is the only question that remains.