Short Report on T-Mobile US Stock

T-Mobile US logged a -0.9% change during today's afternoon session, and is now trading at a price of $155.53 per share.

T-Mobile US returned gains of 10.2% last year, with its stock price reaching a high of $161.19 and a low of $124.92. Over the same period, the stock underperformed the S&P 500 index by -12.3%. As of April 2023, the company's 50-day average price was $146.8. 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 $78,353
Revenue Growth n/a 3.9% 52.0% 17.14% -0.68% -1.53%
Operating Margins 12% 13% 10% 9% 8% 17%
Net Margins 7% 8% 4% 4% 3% 10%
Net Income (MM) $2,888 $3,468 $3,064 $3,024 $2,590 $7,780
Net Interest Expense (MM) $835 $727 $2,483 $3,189 -$33 $58
Depreciation & Amort. (MM) $6,486 $6,616 $14,151 $16,383 $13,651 $12,762
Earnings Per Share $3.36 $4.02 $2.65 $2.41 $2.06 $6.44
EPS Growth n/a 19.64% -34.08% -9.06% -14.52% 212.62%
Diluted Shares (MM) 858 863 1,155 1,255 1,255 1,081
Free Cash Flow (MM) -$1,642 $433 -$2,394 $1,591 $2,811 $6,439
Capital Expenditures (MM) $5,541 $6,391 $11,034 $12,326 $13,970 $11,597
Current Ratio 0.81 0.74 1.1 0.89 0.77 0.86
Total Debt (MM) $12,965 $11,965 $67,472 $71,574 $71,626 $72,758
Net Debt / EBITDA 1.0 0.85 2.75 2.79 3.32 2.58

T-Mobile US has growing revenues and increasing reinvestment in the business, a strong EPS growth trend, and irregular cash flows. However, the firm has weak operating margins with a positive growth rate. 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 22.8, compared to an average of 23.78 for the Telecommunications sector. Based on its EPS guidance of $9.97, the company has a forward P/E ratio of 14.7. According to the 16.8% compound average growth rate of T-Mobile US's historical and projected earnings per share, the company's PEG ratio is 1.36. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 9.9%. On this basis, the company's PEG ratio is 2.32. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing T-Mobile US in terms of its equity because its P/B ratio is 2.79 while the sector average is 3.46. The company's shares are currently trading 66.7% above their Graham number.

There's an Analyst Consensus of Some Upside Potential for T-Mobile US:

The 28 analysts following T-Mobile US have set target prices ranging from $129.91 to $235.0 per share, for an average of $179.43 with a buy rating. As of April 2023, the company is trading -18.2% 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 4.7% of the company's shares are sold short. Institutions own 42.2% of the company's shares, and the insider ownership rate stands at 56.66%, suggesting a large amount of insider shareholders. The largest shareholder is Softbank Group Corporation, whose 4% stake in the company is worth $6,740,391,592.

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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