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Is a Beat in Store for T-Mobile (TMUS) This Earnings Season?

Zacks Equity Research
·4 min read

T-Mobile US, Inc. TMUS is scheduled to report fourth-quarter 2019 results on Feb 6, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 19.6%, beating the Zacks Consensus Estimate by 19 cents. Notably, T-Mobile topped the Zacks Consensus Estimate for earnings in the trailing four quarters, the beat being 20.4%, on average.

The national wireless carrier is expected to have recorded higher aggregate revenues on a year-over-year basis, driven by the inherent strength of its resilient business model amid a competitive and cut-throat business environment. The performance was supported by strong customer growth while the company deployed the country’s first nationwide 5G network and worked to close its merger with Sprint. Whether this can result into an earnings beat remains to be seen.

Let’s find out how things have shaped up prior to the announcement.

Factors at Play

During the fourth quarter, T-Mobile continued to demonstrate the brand’s strength and momentum. It added 1.9 million total net customers in the quarter under review, bringing its total customer base to 86 million at the end of 2019. This marked the 27th consecutive quarter in which the company generated more than 1 million total net customer additions.

Bellevue, WA-based T-Mobile deployed America’s first nationwide 5G network in the to-be-reported quarter using 600 MHz spectrum, a foundational layer of its 5G network, covering more than 200 million people and more than 1 million square miles across the United States. The company also saw continued strength in total branded postpaid net additions, with net additions of 1.3 million in the fourth quarter. While branded prepaid net customer additions were 77,000 in the quarter, wholesale net customer additions were 472,000.

Postpaid phone churn accounted to 1.01% in the quarter, up 2 basis points (bps) year over year, reflecting strong brand loyalty in a heightened competitive environment. Branded prepaid churn was 3.97% in the December quarter, down 2 bps year over year.

The Zacks Consensus Estimate for Service segment revenues, which account for the lion’s share of total revenues, is pegged at $8,671 million. This indicates an increase of 5.9% from the year-ago quarter’s reported figure. Revenues from Equipment are estimated to be $2,780 million, implying a decline of 5.4% from the prior-year quarter’s reported figure.

For the December quarter, the consensus estimate for total revenues stands at $11,816 million, implying a rise of 3.2% from the year-ago quarter’s reported figure. Consequently, adjusted earnings per share are pegged at 84 cents, indicating an increase of 12% from the prior-year quarter’s reported figure.

What Our Model Says

Our proven model predicts an earnings beat for T-Mobile this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: T-Mobile’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.39% as the former is pegged at 85 cents and the latter at 84 cents.

T-Mobile US, Inc. Price and EPS Surprise


T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. Price and EPS Surprise

T-Mobile US, Inc. price-eps-surprise | T-Mobile US, Inc. Quote


Zacks Rank: T-Mobile currently has a Zacks Rank #3.

Other Stocks to Consider

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Silicon Motion Technology Corporation SIMO is slated to release quarterly results on Feb 6. It has an Earnings ESP of +5.88% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Manitowoc Company, Inc. MTW is scheduled to release results on Feb 6. The company has an Earnings ESP of +32.14% and sports a Zacks Rank #1.

Post Holdings, Inc. POST has an Earnings ESP of +5.47% and carries a Zacks Rank of 2. The company is set to report results on Feb 6.

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