T-Mobile US shares fell by -2.4% during the day's afternoon session, and are now trading at a price of $233.54. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
T-Mobile US's Valuation Is in Line With Its Sector Averages:
T-Mobile US, Inc., together with its subsidiaries, provides wireless communications services in the United States, Puerto Rico, and the United States Virgin Islands. The company belongs to the Telecommunications sector, which has an average price to earnings (P/E) ratio of 18.22 and an average price to book (P/B) ratio of 1.86. In contrast, T-Mobile US has a trailing 12 month P/E ratio of 21.9 and a P/B ratio of 4.31.
T-Mobile US has moved 15.0% over the last year compared to 17.1% for the S&P 500 — a difference of -2.1%. T-Mobile US has a 52 week high of $276.49 and a 52 week low of $205.39.
Generally Positive Cash Flows but Not Enough Current Assets to Cover Current Liabilities:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $44,998 | $68,397 | $80,118 | $79,571 | $78,558 | $81,400 |
| Operating Margins | 13% | 10% | 9% | 8% | 18% | 22% |
| Net Margins | 8% | 4% | 4% | 3% | 11% | 14% |
| Net Income (M) | $3,468 | $3,064 | $3,024 | $2,590 | $8,317 | $11,339 |
| Net Interest Expense (M) | $727 | $2,483 | $3,189 | -$3,364 | -$3,335 | -$3,411 |
| Depreciation & Amort. (M) | $6,616 | $14,151 | $16,383 | $13,651 | $12,818 | $12,100 |
| Diluted Shares (M) | 864 | 1,252 | 1,255 | 1,255 | 1,200 | 1,173 |
| Earnings Per Share | $4.02 | $2.65 | $2.41 | $2.06 | $6.93 | $9.66 |
| EPS Growth | n/a | -34.08% | -9.06% | -14.52% | 236.41% | 39.39% |
| Avg. Price | $75.39 | $103.89 | $130.23 | $125.25 | $160.33 | $233.83 |
| P/E Ratio | 18.57 | 38.76 | 53.81 | 60.51 | 22.84 | 24.11 |
| Free Cash Flow (M) | $433 | -$2,394 | $1,591 | $2,811 | $8,758 | $13,453 |
| CAPEX (M) | $6,391 | $11,034 | $12,326 | $13,970 | $9,801 | $8,840 |
| EV / EBITDA | 7.13 | 7.43 | 9.95 | 11.09 | 9.93 | 11.77 |
| Total Debt (M) | $25,444 | $75,704 | $76,438 | $71,960 | $78,637 | $82,333 |
| Net Debt / EBITDA | 1.94 | 3.14 | 3.0 | 3.34 | 2.71 | 2.55 |
| Current Ratio | 0.74 | 1.1 | 0.89 | 0.77 | 0.91 | 0.91 |
T-Mobile US has strong operating margins with a positive growth rate and generally positive cash flows. Additionally, the company's financial statements display growing revenues and a flat capital expenditure trend and a strong EPS growth trend. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.91. Finally, we note that T-Mobile US has significant leverage levels.
