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Highlights:
Strong Year-to-Date Performance: T-Mobile's stock has increased by approximately 35% in 2024, outperforming Verizon, which saw a 22% gain over the same period.
Positive Earnings Projections: Anticipated earnings for Q3 2024 are projected at $2.44 per share, reflecting a year-over-year increase of over 30%, with revenue expected to reach around $20.1 billion, marking a 4% growth compared to last year.
Robust Subscriber Growth: T-Mobile led the industry in postpaid phone net additions in Q2 2024, adding 777,000 connections, and is likely to maintain strong net additions into Q3, supported by effective deployment of mid-band spectrum for 5G technology.
T-Mobile (NASDAQ:TMUS) is set to release its Q3 2024 results toward the end of October. The company has exhibited robust stock performance, with shares rising approximately 35% year-to-date, surpassing Verizon's 22% gain during the same timeframe. Earnings for the upcoming quarter are expected to be $2.44 per share, a significant increase of over 30% compared to the previous year. Revenue is projected at around $20.1 billion, reflecting a 4% year-over-year increase and aligning with consensus estimates.
This growth is likely driven by a surge in wireless services revenue, as more customers migrate to higher-value 5G plans and subscriber growth remains stable. In the previous quarter, T-Mobile set an industry record for postpaid phone net additions, achieving an increase of 777,000 connections. The company is expected to sustain this momentum into Q3, bolstered by its strategic deployment of mid-band spectrum, which balances speed and coverage effectively, unlike the ultra-fast but limited coverage provided by millimeter-wave spectrum employed by competitors Verizon and AT&T.
Additionally, the launch of the iPhone 16 series in mid-September is anticipated to further boost subscriber numbers, as initial sales indicate better performance compared to previous smartphone releases. T-Mobile's price increases earlier in the year and a shift toward more premium plans are also expected to elevate per-user revenue for the quarter.
Furthermore, T-Mobile has made notable strides in the broadband market, adding 406,000 subscribers in the last quarter alone, bringing its total fixed wireless broadband customer base to approximately 5.6 million. The company’s focus on integrating its networks post-Sprint acquisition is anticipated to enhance profitability as legacy Sprint towers are decommissioned.
Despite T-Mobile’s solid performance and growth outlook, its valuation appears high, trading at about 24 times forward earnings, notably above the high single-digit multiples of competitors like AT&T and Verizon. Analysts value T-Mobile stock at around $184 per share, indicating it may be overvalued relative to its peers. As the company navigates a complex macroeconomic landscape, its ability to maintain this growth trajectory will be closely monitored.
