Does T-Mobile’s Stock Offer Room to Grow After Recent Quarterly Results?

If you are unsure about what to do with T-Mobile US stock right now, you are not alone. The last close price was $239.49, and despite a small dip over the past month with a -4.9% return, the shares have gained an impressive 9.1% so far this year and 20.6% over the last 12 months. Longer-term investors are sitting on even juicier gains, with T-Mobile US up 85.9% over three years and more than doubling over five years.

These strong returns are occurring alongside some notable shifts in the market landscape. As competition in the telecom sector increases and T-Mobile continues to expand its 5G network, investors have started to recognize both new growth potential and changes in the company’s risk profile. With each price swing, some see fresh upside, while others are asking if the valuation has become stretched.

To help you make sense of all this, let’s look at the data. On a valuation score of 0 to 6, where each check reflects an undervalued area, T-Mobile US lands right in the middle with a score of 3. This means that according to our standard checklist, the stock is undervalued in half of the key ways that really matter.

Next, we will break down which parts of the valuation puzzle are signaling real opportunity, and which may be flashing caution. Stay tuned as we wrap things up with an even smarter way of sizing up T-Mobile’s true worth that every smart investor should know.

Why T-Mobile US is lagging behind its peers

Approach 1: T-Mobile US Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) valuation estimates a company’s worth by projecting its future cash flows and then discounting them back to their value in today’s dollars. This approach helps investors understand what a stock is truly worth based on the cash the business is expected to generate over time.

For T-Mobile US, the latest reported Free Cash Flow stands at $12.91 billion. Analysts forecast consistent growth in the company’s cash-generating power, projecting Free Cash Flow to reach $21.84 billion by 2029. Although analyst estimates only extend for about five years, further projections beyond this rely on model extrapolations. These projections provide a long-term view of the company’s potential to produce steady, increasing cash flows over the years ahead.

According to the DCF model, T-Mobile US has an estimated intrinsic value of $468.78 per share. Compared with the latest closing price of $239.49, the model suggests the stock is trading at a 48.9% discount. In short, this means the shares may be significantly undervalued relative to what its future cash flows are worth today.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for T-Mobile US.

Our Discounted Cash Flow (DCF) analysis suggests T-Mobile US is undervalued by 48.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: T-Mobile US Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies like T-Mobile US. It reflects how much investors are willing to pay for each dollar of current earnings, making it especially helpful for firms with consistent and positive net income. The PE ratio is shaped by expectations for future growth and the risks inherent in the business. A company that shows strong forecasted earnings growth is generally awarded a higher PE multiple, while higher risk or uncertain prospects drive the ratio lower.

Currently, T-Mobile US trades at a PE ratio of 22x. This sits above the wireless telecom industry average of 17.7x and higher than the 9.5x peer average, suggesting the market recognizes T-Mobile’s growth outlook and competitive advantages. However, relying solely on industry or peer comparisons can miss other important factors such as profit margins, size, and risk profile. That is where Simply Wall St’s “Fair Ratio” comes in, a proprietary calculation that considers the full context of the business, from projected earnings growth to risk and market cap, to determine a suitable multiple for T-Mobile right now.

For T-Mobile, the Fair Ratio is estimated at 25.3x. This means its actual PE of 22x is below what would be expected given its growth prospects and business quality. In other words, compared to its tailored Fair Ratio, the stock looks undervalued on this metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your T-Mobile US Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple but powerful way to connect your personal view of a company’s future, such as what you believe about its revenue, earnings, margins, and risks, with a financial forecast and a fair value, all in one place. On Simply Wall St’s Community page, Narratives let millions of investors quickly create and revise their story for a stock, using key estimates and fair values that update automatically as news or earnings emerge.

This means your buy or sell decisions are backed by a robust process: you compare your Narrative Fair Value to today’s market price, and adapt as your views or the company’s fundamentals change. Narratives are designed to be accessible even if you are not a financial expert. They make it easy to sense-check assumptions, see how your views differ from others, and watch as your fair value adjusts with every major development.

For example, with T-Mobile US, one investor’s Narrative might assume aggressive revenue growth and a future price target of $309 per share, while another, expecting more muted growth and risks, may see fair value at just $200 per share.

For T-Mobile US, we make it easy for you with previews of two leading T-Mobile US Narratives:

🐂 T-Mobile US Bull Case

Fair Value: $272.30

Undervalued by: 12.0%

Revenue Growth (3yr forecast): 5.3%

• T-Mobile’s continued leadership in 5G and expansion into fiber broadband are expected to drive both revenue and margin growth, supporting higher future earnings.
• Strategic investments in digital platforms and targeted ARPU (Average Revenue Per User) initiatives are seen as key to improving profitability and shareholder value.
• Analyst consensus price target is $272, with bullish cases citing up to $309 if growth is realized. There are risks from tariffs, competition, and the initial costs of fiber rollouts.

🐻 T-Mobile US Bear Case

Fair Value: $201.69

Overvalued by: 18.7%

Revenue Growth (3yr forecast): 4.3%

• While T-Mobile’s 5G expansion and home internet offerings provide growth avenues, intense competition and regulatory risks may limit upside.
• Operational improvements and the Sprint merger could help margins, but market saturation and legal challenges might pressure future growth and profitability.
• With a forecast fair value of $201, this view sees the current stock price as ahead of fundamentals, warranting caution as growth moderates and risks increase.

Do you think there's more to the story for T-Mobile US? Create your own Narrative to let the Community know!

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.

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