A Fresh Look at T-Mobile US (TMUS) Valuation After Major Olympics, iPhone, and Airline WiFi Announcements

If you have been keeping an eye on T-Mobile US (TMUS) lately, you have probably noticed a flurry of news that has everyone talking. Hot off the press, T-Mobile has landed a deal as the Official Telecommunications Services Provider for the LA28 Olympic and Paralympic Games, promising to roll out advanced 5G connectivity at a massive scale. In addition, it is launching the latest iPhone lineup and deepening its consumer reach by teaming up with Southwest Airlines to offer free inflight WiFi for Rapid Rewards Members. All three updates reflect a company that is not just keeping pace, but reshaping how people and businesses stay connected.

These headline-grabbing moves come during a year when TMUS shares have generally trended up, gaining 19% over the last twelve months and about 8% since January. The mix of large-scale business contracts, high-profile partnerships, and steady product launches has helped keep momentum going, though short-term swings in the price over the past month hint at some volatility as investors digest new information. The buzz surrounding T-Mobile’s latest initiatives is adding to its image as both a growth story and a mainstay in a competitive industry.

With these high-visibility announcements and recent stock performance in mind, is T-Mobile now undervalued, or is the market already factoring in its next phase of growth?

Most Popular Narrative: 17.8% Overvalued

According to WallStreetWontons, the prevailing narrative sees T-Mobile US trading above its fair value, with projected returns weighed down by a robust stock price and the company's revenue and earnings forecasts.

"T-Mobile’s 5G Home Internet service is gaining traction, providing an alternative to traditional broadband services. This service has the potential to capture a significant market share, especially in underserved areas."

Curious how much future growth is already reflected in this stock price? The narrative points to aggressive revenue and profit forecasts that contribute to the sharply higher fair value. Wondering what long-term assumptions support this outlook? There is a key tension between growth ambitions and actual financial projections that might surprise you.

Result: Fair Value of $201.69 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as increased competition or regulatory changes could quickly shift T-Mobile’s outlook and challenge the current valuation narrative.

Find out about the key risks to this T-Mobile US narrative.

Another View: Discounted Cash Flow Changes the Picture

While the market narrative suggests T-Mobile is priced above its fair value, our DCF model tells a different story and indicates the stock is actually undervalued. Could long-term cash flows be the missing factor investors are overlooking?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out T-Mobile US for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own T-Mobile US Narrative

If you have a different perspective or want to dive into the numbers yourself, shaping your own narrative on T-Mobile US can be done in just a few minutes. Do it your way

A great starting point for your T-Mobile US research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Take action now to open up a world of investment opportunities you might be missing. The Simply Wall Street screener makes it easy to identify stocks with game-changing potential.

• Uncover high-yield opportunities by checking out companies offering dividend stocks with yields > 3%, which can enhance your portfolio’s cash flow potential.
• Find undervalued gems with strong cash flow prospects by using our unique insights for undervalued stocks based on cash flows.
• Explore the next tech wave by searching for leaders in AI innovation and transformation, all highlighted in our selection of AI penny stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com