T-Mobile Q4 Earnings: Can Shares Remain Strong?

Earnings season is critically important for the market, as investors finally have the ability to analyze what transpired behind closed doors.

And, of course, it goes without saying that this earnings season is massively important, as many have feared an earnings “apocalypse.”

However, this view certainly has not materialized, with many companies posting better-than-expected results.

This week, we received several notable quarterly prints, including those from Microsoft MSFT and the titan itself, Tesla TSLA.

Now, a giant in the communications space, T-Mobile TMUS, is scheduled to unveil its quarterly results on Wednesday, February 1^Stbefore the market opens.

How does the company currently stack up? We can use results received from a peer, Verizon Communications VZ, as a small gauge. Let’s take a closer look.

Verizon Communications Q4

Verizon posted somewhat mixed results, falling short of the Zacks Consensus EPS Estimate by a marginal 0.8% and reporting earnings of $1.19 per share.

Quarterly revenue topped expectations modestly, reported at $35.2 billion and growing 3.5% year-over-year. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

In addition, total wireless service revenue totaled $18.8 billion, climbing nearly 6% from the year-ago quarter thanks to premium adoption and pricing actions implemented by the company.

Impressively, total broadband net additions were reported at 416,000, representing the best broadband performance in over ten years and confirming healthy demand for fixed wireless products.

And VZ’s cash flow from operations pulled back marginally from the year-ago quarter due to higher device payment receivables, reported at $37.1 billion.

Now, onto T-Mobile.

T-Mobile

Quarterly Estimates –

Analysts have primarily been bullish for the quarter to be reported, with two positive earnings estimate revisions hitting the tape over the last several months. The Zacks Consensus EPS Estimate of $1.10 indicates no change in earnings Y/Y.

Image Source: Zacks Investment Research

Further, our consensus revenue estimate stands at $20.8 billion, suggesting a marginal 0.2% improvement from the year-ago quarter.

Quarterly Performance –

T-Mobile snapped a streak of positive surprises and posted weak quarterly results in its latest release, falling short of the Zacks Consensus EPS Estimate by nearly 25%.

Top-line results have also left something to be desired, with TMUS missing sales expectations in five consecutive quarters.

Image Source: Zacks Investment Research

Valuation –

Currently, T-Mobile shares trade at a 2.2X forward price-to-sales ratio, above the 1.8X five-year median and nearly in line with highs of 2.3X in 2022.

Image Source: Zacks Investment Research

In addition, the company’s price-to-book works out to be 2.6X, above the 2.4X five-year median and just below highs of 2.7X in 2022.

Image Source: Zacks Investment Research

TMUS carries a Style Score of “C” for Value.

Putting Everything Together

The market’s rebound in 2023 has undoubtedly been welcomed with open arms, with a forecasted earnings apocalypse yet to materialize.

We’ve received many quarterly prints thus far, and next week, we’ll receive the same from T-Mobile (TMUS).

A peer, Verizon Communications VZ, posted somewhat mixed results, falling short of earnings expectations but exceeding revenue estimates.

For T-Mobile’s upcoming release, analysts have primarily been bullish, with estimates indicating zero change in earnings but a slight revenue increase Y/Y.

Heading into the release, T-Mobile TMUS is currently a Zacks Rank #3 (Hold) paired with an Earnings ESP Score of -0.5%.

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T-Mobile Q4 Earnings: Can Shares Remain Strong?

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