---
title: "AT&T Q3 2026 earnings: $0.65 EPS beats, but charges cut profit"
canonical_url: https://www.stockexpertai.com/journal/2026-10-23/at-and-t-q3-2026-earnings-0-65-eps-beats-but-a-one-time-charge-cuts-profit-dcb4bcb0852c
last_updated: 2026-10-23T04:20:43.214Z
section: "Earnings Watch"
author: "Stock Expert AI Research"
publisher: Stock Expert AI
tickers: T
content_type: journal-article
---

# AT&T Q3 2026 earnings: $0.65 EPS beats, but charges cut profit

_AT&T beat Wall Street's third-quarter EPS and revenue estimates, while reported net income fell sharply in a quarter that included charges tied to the Mexico sale and job cuts._

![Data cover: AT&T Q3 2026 earnings: $0.65 EPS beats, but charges cut profit](/public-objects/streetnews/2026-10-23/EARNINGS_WATCH-cover-959db843.jpg)
Stock Expert AI data cover: figures from Financial Modeling Prep; background is an illustrative public-domain photo, credited on the image.

AT&T (NYSE: T) reported adjusted earnings of $0.65 per share for the third quarter ended Sept. 30, 2026, against an analyst estimate of $0.602, and revenue of $32.30B against an estimate of $31.69B. Revenue was higher than a year earlier, but reported (GAAP) net income fell 90.4% from the year-ago quarter. One-time charges weighed on the quarter, and the year-ago profit was unusually high, so the headline beat and the bottom line tell different stories.

## Key facts

- **Adjusted EPS (Q3 FY2026, reported Oct. 21, 2026):** $0.65 vs. an analyst estimate of $0.602, a beat of about $0.05 (8.0%).
- **Revenue (Q3 FY2026):** $32.30B vs. an estimate of $31.69B, a beat of $610.8M (1.9%). The company's filing shows $32.32B, which is 5.3% higher than the $30.71B in the third quarter of 2025.
- **GAAP results:** Net income was $891.0M, or $0.12 diluted EPS, vs. $9.31B and $1.29 a year earlier.
- **Cash flow:** Free cash flow (cash from operations minus capital spending) was $5.46B in the quarter, vs. $5.26B a year earlier.
- **Stock:** $22.74 on Oct. 22, 2026, up 3.79% on the day, within a 52-week range of $19.89-$29.44.

| Metric | Q3 FY2026 | Year-ago (Q3 FY2025) or estimate |
|---|---|---|
| Adjusted EPS | $0.65 | Estimate: $0.602 |
| Revenue (reported) | $32.30B | Estimate: $31.69B |
| Revenue (filing) | $32.32B | $30.71B |
| Operating income | $4.09B | $6.12B |
| Net income | $891.0M | $9.31B |
| Diluted EPS (GAAP) | $0.12 | $1.29 |
| Operating margin | 12.7% | 19.9% |
| Gross margin | 61.5% | 61.5% |

## What happened

**The beat.** AT&T cleared both Wall Street targets. "Adjusted" EPS strips out one-time items, so it is the number analysts track. The gap between $0.65 adjusted and $0.12 GAAP is the story of the quarter.

**Why profit dropped.** On the call, management described two notable adjustments: a $2.6 billion non-cash impairment (an accounting write-down) tied to the planned sale of AT&T Mexico, and a roughly $800 million employee separation charge that will impact cash primarily in 2027. These charges weighed on the quarter and pushed the operating margin to 12.7% from 22.3% in the second quarter. They do not explain the whole year-over-year drop, though: the year-ago net income of $9.31B was far above the $3.72B-$4.63B earned in the other recent quarters. The gross margin, which these charges likely did not affect, held at 61.5%, the same as a year earlier. That suggests the core business was not what weakened.

**Where growth came from.** Wireless service revenue was $18.56B in the quarter. On the call, management said AT&T added 696,000 advanced home internet customers: 416,000 on fiber and 280,000 on Internet Air, its fixed wireless product. It also added 379,000 postpaid phone customers (people on monthly plans). Postpaid phone revenue per user rose 4%.

CEO John Stankey described the strategy this way: "the most durable customer combination in our industry is a fiber-fed broadband customer with a great wireless service on top of it, bar none." The company calls customers who buy both "converged." About 43% of advanced home internet customers also have an AT&T postpaid wireless account, management said.

CFO Pascal Desroches said "the vast majority of our growth is going to be driven by customer additions and not pricing." The company reported an adjusted EBITDA margin of 38.7%, which it called the highest third-quarter margin since its early-decade refocus. (EBITDA is earnings before interest, taxes, depreciation and amortization, a rough gauge of operating cash profit.) Legacy voice and data lines continued to shrink, and management said they are a drag on both revenue and EBITDA.

**Guidance.** AT&T raised its full-year 2026 adjusted EPS outlook, said adjusted EBITDA should grow in the upper part of its prior range, and lowered its expected cash taxes. It kept its service revenue outlook at low single-digit growth. For the fourth quarter it expects higher marketing and customer acquisition costs and some unfavorable vendor settlements in the legacy business. It also expects free cash flow to be higher than a year earlier.

## Why it matters for investors

**Five-quarter trend.** Cash generation has been steadier than reported profit.

| Quarter | Revenue | Operating margin | Free cash flow |
|---|---|---|---|
| Q3 FY2025 | $30.71B | 19.9% | $5.26B |
| Q4 FY2025 | $33.47B | 18.3% | $4.54B |
| Q1 FY2026 | $31.51B | 21.1% | $2.68B |
| Q2 FY2026 | $31.56B | 22.3% | $5.17B |
| Q3 FY2026 | $32.32B | 12.7% | $5.46B |

Revenue has risen in each of the last two quarters. Free cash flow in Q3 FY2026 was the highest of the five. Operating margin was on an upward path until the charges hit. Capital spending was $5.06B in Q3 FY2026, below the prior quarter's $5.70B. AT&T spent $2.80B on buybacks and $1.95B on dividends in the quarter, so shareholder payouts were covered by free cash flow.

**Valuation vs. peers.** On trailing 12-month figures, AT&T trades at a P/E of 12.29, a price-to-sales ratio of 1.21 and a price-to-free-cash-flow ratio of 8.73. Its dividend yield is 4.9%, and its net margin is 10.1%.

| Company | P/E | Net margin |
|---|---|---|
| AT&T | 12.29 | 10.1% |
| Comcast | 7.23 | 9.2% |
| Charter Communications | 2.87 | 9.1% |
| Deutsche Telekom | 14.63 | 7.2% |
| KDDI | 14.68 | 12.1% |

AT&T's margin is higher than that of Comcast, Charter and Deutsche Telekom, and its P/E sits between the U.S. cable companies and the two international carriers. KDDI has the highest net margin in this group.

**Analysts.** The Street consensus is "Hold": 62 ratings, with 1 strong buy, 26 buy, 29 hold, 6 sell and no strong sell. The average price target is $26.39 and the median is $27.00, within a range of $20.00 to $33.00. Several firms, including JP Morgan, Morgan Stanley and KeyBanc, reaffirmed their ratings on Oct. 22, 2026. Those targets are analysts' views, not ours. Analysts expect revenue of $32.36B and EPS of $0.69 for the period ending March 2028, and revenue of $32.10B and EPS of $0.72 for the period ending June 2028.

**Our MoonshotScore.** Stock Expert AI's MoonshotScore V2 for AT&T is 47.7, rated "Fair." Among the pillars, which are measured relative to the sector, quality (69) and valuation (68) are the strong areas, momentum (59) is moderate, and safety (52) is middling. Growth (44) is the weakest. That fits a mature carrier: solid profitability and a modest price, but limited expansion.

## What could go wrong

- **Debt.** Total debt was $178.15B and net debt (debt minus cash) was $167.38B as of Sept. 30, 2026, against cash and short-term investments of $10.77B. Management said net debt to adjusted EBITDA rose to 3.13x from 2.68x after a large spectrum purchase from EchoStar, and it aims to return to about 2.5x during 2029. Debt-to-equity is 1.67.
- **Financial-strength scores.** FMP lists a Piotroski score of 5 (on a 0-9 scale), which is mid-range, and an Altman Z-score of 0.81, which points to a stretched balance sheet, though the Altman model is a blunt tool for debt-heavy telecoms.
- **Fiber pricing.** Fiber revenue per user fell 4% from a year earlier, and management expects a similar decline in the fourth quarter as promotions and bundles dilute averages.
- **Costs and cash.** Management cited higher customer acquisition and device costs, a working-capital drain from upfront device payments, and higher cash interest.
- **Legacy and Mexico.** Legacy service revenue is falling at roughly a quarter per year, according to the call. Selling AT&T Mexico also removes some annual cash flow.
- **Competition.** Management called the third quarter competitive. On the call, Stankey said low-earth-orbit satellite internet is most useful at the network edges, and that fixed wireless will likely peak and decline as better technologies arrive. Management also said the effect of agentic AI on the industry is still unclear.
- **Insiders.** The recent Form 4 filings show no open-market insider purchases or sales in the last 90 days, so there is no insider signal either way.

## What to watch next

- **Q4 results, expected Jan. 27, 2027.** The consensus estimate is EPS of $0.50 on revenue of $34.65B.
- **2027 free cash flow detail.** Management already gave 2027-2028 capital investment of $22 billion to $23 billion a year, and promised more color on the drivers behind its $19 billion+ free cash flow outlook for 2027 with fourth-quarter results.
- **Fiber revenue per user.** Watch whether the decline stays near 4% or deepens. Desroches noted that "as recent as last December, we had a pretty meaningful price increase that impacted much of our fiber base," which he said shows a history of managing base pricing.
- **Leverage.** Progress toward the 2.5x debt target matters for buyback capacity.
- **Acquisitions.** Stankey said of buying more network footprint: "Tell me the price and I'll give you the answer to the question."

## Frequently asked questions

## Q: Did AT&T beat earnings estimates in the third quarter of 2026?

Yes. For the quarter ended Sept. 30, 2026, AT&T reported adjusted EPS of $0.65 against an estimate of $0.602, and revenue of $32.30B against an estimate of $31.69B. The company reported results on Oct. 21, 2026.

## Q: Why did AT&T's net income fall so much if it beat estimates?

Reported net income was $891.0M, down 90.4% from $9.31B a year earlier. The quarter included a non-cash write-down tied to the sale of AT&T Mexico and an employee separation charge, which management called notable adjustments, and the year-ago quarter was unusually high. Analysts' adjusted EPS excludes such items. Gross margin was 61.5%, matching the year-ago level.

## Q: Is AT&T's dividend covered by cash flow?

In the third quarter of 2026, AT&T generated $5.46B of free cash flow and paid $1.95B in dividends, plus $2.80B in buybacks. The dividend yield is 4.9%. Debt is high, however, with net debt of $167.38B as of Sept. 30, 2026. This is information, not a recommendation.


*This is educational content, not investment advice. Past performance does not guarantee future results.*

## Related Tickers
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## Sources
- [Stock Expert AI T page: quote, financials and MoonshotScore](https://www.stockexpertai.com/stock/t)
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- [benzinga.com: Stock of the Day: Where is the Bottom for AT&T?](https://www.benzinga.com/trading-ideas/technicals/26/10/62538451/stock-of-the-day-where-is-the-bottom-for-att)
- [seekingalpha.com: AT&T Investors Are Still Boiling Alive](https://seekingalpha.com/article/4956483-att-investors-still-boiling-alive)
- [zacks.com: Is AT&T Worth Buying as Fiber Growth Offsets Rising Leverage Risks?](https://www.zacks.com/stock/news/3013029/is-at-t-worth-buying-as-fiber-growth-offsets-rising-leverage-risks?cid=CS-STOCKNEWSAPI-FT-analyst_blog_plus|zer_report_insights-3013029)
- [zacks.com: AT&T Stock Falls 13.4% in a Month. Is the Drop a Buying Opportunity?](https://www.zacks.com/stock/news/3013017/at-t-stock-falls-13-4-in-a-month-is-the-drop-a-buying-opportunity?cid=CS-STOCKNEWSAPI-FT-analyst_blog_plus|zer_report_insights-3013017)

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_AI-generated under human editorial supervision. Educational research, not financial advice._