T-Mobile is set to report its Q1 2024 results on April 25, with earnings expected to come in at $1.88 per share, showing 18% growth compared to the previous year and revenue projected at $19.90 billion. The carrier has been seeing strong momentum with its postpaid business, adding 934,000 postpaid phone customers in Q4 2023 and 3.1 million customers over the year, outperforming industry rivals Verizon and AT&T. T-Mobile’s early deployment of mid-band spectrum for 5G technology has given it an edge, offering a balance between speed and coverage. The company has also made strides in profitability through network integration, workforce reductions, and growth in free cash flow. Additionally, T-Mobile’s foray into the broadband market has been successful, with over 500,000 subscribers added each quarter.
Despite witnessing gains in its stock price, T-Mobile has had inconsistent returns over the past few years, underperforming the S&P 500 in 2021 and 2023. The stock trades at a rich valuation of about 18x forward earnings compared to rivals like AT&T and Verizon, which trade at high single-digit multiples. However, the high valuation is justified by T-Mobile’s strong network performance and potential for growth and margin improvement through network closures. T-Mobile is valued at $176 per share, indicating a 10% upside from the current market price. The Trefis High Quality Portfolio has outperformed the S&P 500 consistently over the same period, suggesting a more stable investment option amid uncertain market conditions.
T-Mobile’s deployment of mid-band spectrum for 5G technology has paid off with strong customer additions and network performance. The company’s focus on profitability through network integration and workforce reductions has resulted in significant growth in free cash flow. Additionally, T-Mobile’s expansion into the broadband market has been successful, outpacing competitors like Comcast. While the stock has seen gains, it has had inconsistent returns compared to the S&P 500, but a rich valuation is justified by the company’s strong network performance and growth potential.
The uncertainty of the macroeconomic environment with high oil prices and elevated interest rates raises questions about T-Mobile’s performance in the next 12 months. The stock has underperformed the S&P 500 in certain years, highlighting the challenges of consistently beating the benchmark index for individual stocks. However, T-Mobile’s focus on network performance and potential for margin improvement could drive future growth and improve stock performance. The company’s valuation, while rich compared to peers, reflects its strong market position and growth prospects.
Overall, T-Mobile is poised to report strong Q1 2024 results driven by postpaid customer growth, network performance, and profitability improvements. The company’s focus on mid-band spectrum for 5G technology, broadband expansion, and margin improvement through network integration and workforce reductions bode well for future growth. While the stock has had inconsistent returns compared to the S&P 500, its rich valuation is supported by strong network performance and growth potential. Investors will be closely watching T-Mobile’s earnings report for insights into the company’s performance and outlook in the competitive telecom market.
