What Our Analysts Know About T-Mobile US

Now trading at a price of $148.39, T-Mobile US has moved 0.5% so far today.

Over the last year, T-Mobile US logged a -1.0% change, with its stock price reaching a high of $153.36 and a low of $124.92. Over the same period, the stock underperformed the S&P 500 index by -17.0%. As of April 2023, the company's 50-day average price was $142.2. T-Mobile US, Inc., together with its subsidiaries, provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. Based in Bellevue, WA, the large-cap Telecommunications company has 71,000 full time employees. T-Mobile US has offered a 0.4% dividend yield over the last 12 months.

Growing Revenues With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $43,310 $44,998 $68,397 $80,118 $79,571 $78,578
Gross Margins 12% 13% 10% 9% 8% 14%
Operating Margins 12.0% 13.0% 10.0% 9.0% 8.0% 14.0%
Net Margins 7.0% 8.0% 4.0% 4.0% 3.0% 8.0%
Net Income (MM) $2,888 $3,468 $3,064 $3,024 $2,590 $6,146
Net Interest Expense (MM) $835 $727 $2,483 $3,189 -$33 $14
Depreciation & Amort. (MM) $6,486 $6,616 $14,151 $16,383 $13,651 $12,888
Earnings Per Share $3.36 $4.02 $2.65 $2.41 $2.06 $5.02
Diluted Shares (MM) 858 863 1,155 1,255 1,255 1,166
Free Cash Flow (MM) -$1,642 $433 -$2,394 $1,591 $2,811 $4,326
Capital Expenditures (MM) $5,541 $6,391 $11,034 $12,326 $13,970 $12,807
Net Current Assets (MM) -$39,469 -$48,827 -$110,933 -$116,570 -$122,615 -$124,615
Long Term Debt (MM) $12,124 $10,958 $61,830 $67,076 $65,301 $68,035
Net Debt / EBITDA 1.0 0.85 2.75 2.79 3.32 2.92

T-Mobile US has growing revenues and increasing reinvestment in the business, a pattern of improving cash flows, and positive EPS growth. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a stable trend. Finally, we note that T-Mobile US has significant leverage.

T-Mobile US's Valuation Is in Line With Its Sector Averages:

T-Mobile US has a trailing twelve month P/E ratio of 22.1, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of $9.98, the company has a forward P/E ratio of 14.2. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 6.9%. On this basis, the company's PEG ratio is 3.19, which suggests that it is overpriced. In contrast, the market is likely undervaluing T-Mobile US in terms of its equity because its P/B ratio is 2.67 while the sector average is 3.12. The company's shares are currently trading 85.6% above their Graham number. In conclusion, T-Mobile US's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

T-Mobile US Has an Analyst Consensus of Some Upside Potential:

The 29 analysts following T-Mobile US have set target prices ranging from $118.49 to $235.0 per share, for an average of $178.02 with a buy rating. As of April 2023, the company is trading -20.1% away from its average target price, indicating that there is an analyst consensus of some upside potential.

T-Mobile US has an average amount of shares sold short because 4.8% of the company's shares are sold short. Institutions own 43.2% of the company's shares, and the insider ownership rate stands at 54.64%, suggesting a large amount of insider shareholders. The largest shareholder is Softbank Group Corporation, whose 4% stake in the company is worth $6,430,796,775.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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