It was a long time coming. Shares of telecom titan AT&T (T 0.71%) have finally reversed course after languishing below $20 per share for some time. In fact, the stock was on the decline, and reached a 52-week low around $14 last August.

Since then, AT&T’s financial performance has proven the company is on a positive trajectory. Its stock began to climb, attaining a 52-week high of $19.99 this August. Shares remain near that high at the time of this writing.

Given the increase in its share price, is AT&T a buy now? Absolutely. Here are some of the reasons why the telecom veteran is a worthwhile investment for the long haul.

AT&T’s core business growth

One factor making AT&T a compelling investment is the growth in its two key businesses: mobile phone service and fiber-optic internet. When John Stankey took over the CEO role in the summer of 2020, he focused the company on these areas, and divested businesses that weren’t core to the company’s telecommunications roots.

Now, AT&T’s multiyear transformation is complete, and its two key businesses are increasing both customer count and revenue. For example, in Q2, AT&T grew its number of postpaid phone subscribers, the telecom industry’s most valuable customers, from 70.3 million in the year-ago period to 71.9 million.

As a result, Q2 mobile services revenue jumped 3.4% year over year to $16.3 billion. This part of AT&T’s operations brought in more than half of its $30 billion in Q2 revenue.

AT&T is also expanding its fiber-optic internet customers. Fiber subscribers totaled 8.8 million in Q2, up from 7.7 million in the previous-year periord. This growth enabled Q2 fiber revenue to surge 18% year over year to $1.8 billion.

Mobile phone service and fiber internet are AT&T’s focus because they feed off of each other. For instance, in Q2 last year, 38% of fiber customers also purchased mobile service from the telecom giant. That percentage rose to 40% in Q2 this year. As Stankey described the trend, “Where we have fiber, we win.”

AT&T’s increasing financial strength

When Stankey took over as CEO, AT&T was in deep debt, which was a factor in its deteriorating stock price. Under Stankey, the company has reduced both its operational costs and debt.

In Q2, AT&T brought down its long-term debt by $2.2 billion, resulting in net debt of $127 billion. While this balance is still substantial, AT&T is committed to achieving a reasonable net debt-to-adjusted EBITDA ratio in the 2.5 range by the first half of 2025.

Moreover, AT&T is looking to achieve run-rate cost savings of over $2 billion by 2026. Its cost savings to date helped AT&T grow Q2 free cash flow (FCF) to $4.6 billion, from $4.2 billion in the previous-year period.

The company expects to generate at least $17 billion in FCF this year, an improvement over 2023’s FCF of $16.8 billion. FCF is an important metric, providing insight into the cash available to invest in the business, fund dividends, and pay debt obligations.

With rising FCF and lower debt, AT&T is positioned to maintain its hefty dividend, another key reason to own shares. While the company has not raised its dividend in the past few years, it still sports an attractive yield of 5.6% at the stock’s current price. It’s a dependable source of passive income since the company has a long track record of paying dividends that stretches back to 1984.

Valuation and other reasons to invest

AT&T’s recent performance has led to growth in its stock price, yet shares remain undervalued. When looking at the company’s price-to-earnings (P/E) ratio, commonly used for stock valuation, AT&T has the lowest compared to its major rivals in the telecommunications industry, Verizon and T-Mobile. For P/E, lower is better as it means you’re paying less for a share of earnings.

Data by YCharts.

AT&T’s low P/E multiple has contributed to the consensus among Wall Street analysts of an overweight rating for AT&T stock with a median price target of $22, which is 12% above where the stock closed Tuesday.

Another attractive AT&T attribute is its innovative endeavors to harness the potential of its 5G wireless network. It has deals with automakers, such as Ford and Rivian, to provide wireless internet for their vehicles.

AT&T is also working to deliver wireless phone service through satellites, which would help it land customers in rural and remote areas.

Ongoing growth in its core businesses, the steady improvement in its debt balance and free cash flow, dependable dividend payments, and an undervalued stock combine to make AT&T shares a buy, and a good long-term investment.