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Can Modest Revenue Growth Aid T-Mobile's (TMUS) Q2 Earnings?

·4 min read

T-Mobile US, Inc. TMUS is scheduled to report second-quarter 2022 results on Jul 27, before the market opens. In the last reported quarter, the company delivered an earnings surprise of 39%. It pulled off a trailing four-quarter earnings surprise of 169.6%, on average.

The Bellevue, WA-based wireless service provider is expected to have recorded year-over-year higher revenues, driven by strong sales across its Postpaid, Prepaid and Wholesale businesses.

Factors at Play

In the second quarter, T-Mobile expanded its footprint of 5G Home Internet service across Colorado, Iowa, Kansas, Missouri, and Oklahoma. With this, more than 40 million households — a third of which are in rural America — will be eligible for 5G Home Internet. They will be provided with broadband speeds that handle multiple devices at the same time for working, streaming, online learning and more. The Zacks Consensus Estimate for Total Postpaid Customer Accounts is pegged at 27,394. The figure indicates a rise of 3.9% from the year-ago quarter’s reported figure.

T-Mobile in the second quarter launched the first and only wireless plan that includes Apple Business Essentials, AppleCare+ for Business Essentials, a new iPhone13 for new lines and more. This will enable small business owners to get access to 5G connectivity, device management, 24/7 support, secure cloud storage and backup and more. The consensus estimate for revenues from Postpaid stands at $11,237 million, which implies an increase from $10,492 million reported a year ago. The consensus estimate for Prepaid stands at $2,472 million, which indicates an increase from $2,427 million reported a year ago, while that for Wholesale is $1,048 million, up from $935 million.

The addition of customers by providing premium services such as one year of ViX+ on Us, the first large-scale global streaming service created specifically for the Spanish-speaking world, might have increased the top line. However, operating costs incurred to gain customers and deploy 5G connectivity are likely to have affected its profitability.

For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $20,196 million, which indicates growth of 1.2% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at 42 cents, suggesting a decline of 46.2% year over year.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for T-Mobile this season. 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. But that’s not the case here. 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, stands at -57.45%, with the former pegged at 18 cents and the latter at 41 cents.

TMobile US, Inc. Price and EPS Surprise

TMobile US, Inc. Price and EPS Surprise
TMobile US, Inc. Price and EPS Surprise

TMobile US, Inc. price-eps-surprise | TMobile US, Inc. Quote

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

Stocks to Consider

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

Crane Holdings, Co. CR is slated to release second-quarter 2022 results on Jul 25. Crane Holdings has an Earnings ESP of +6.98% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medpace Holdings, Inc. MEDP is scheduled to release second-quarter 2022 results on Jul 25. Medpace has an Earnings ESP of +6.23% and a Zacks Rank #2.

ChampionX Corporation CHX has an Earnings ESP of +1.30% and a Zacks Rank #2. ChampionX is set to report second-quarter 2022 results on Jul 26.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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