Thinking about what to do with T-Mobile US stock right now? That makes a lot of sense, considering how lively things have been for shareholders lately. After posting a solid 8.4% gain over the last year and having more than doubled over the past five years with a 100% return, T-Mobile has certainly caught the attention of investors looking for growth stories that still have room to run. However, not everything has been smooth sailing recently. The stock gave back 2.9% over the past week and dipped 6.7% in the last month, signaling some caution or perhaps just some profit-taking as the market digests new developments.
Some of this short-term choppiness is tied to the evolving landscape in the U.S. auto sector and its ripple effects, with tariff headlines sparking debate about which companies stand to benefit or bear new risks. While T-Mobile isn’t making cars, investors have speculated that broader changes in manufacturing costs and shifts in the U.S. market could shape everything from retail partners to broader consumer spending patterns. That macro backdrop keeps things interesting if you’re watching for entry points or considering adding to a long-term position.
On the valuation front, T-Mobile currently earns a value score of 3 out of 6, which means it’s judged undervalued in three of the most common valuation checks. That puts the company somewhere in the middle of the pack for potential bargains, but the real question is how those numbers stack up against the company’s growth prospects and competitive edge. Let’s break down which valuation approaches tell the truest story and why you might want an even better lens to view T-Mobile’s real value, coming up at the end of this analysis.
Why T-Mobile US is lagging behind its peers
Approach 1: T-Mobile US Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model aims to estimate the true value of a company by projecting its future cash flows and discounting them back to today's dollars. This provides an intrinsic value that is independent of market swings. For T-Mobile US, this approach uses current and forecasted Free Cash Flow data to build a picture of ongoing business strength.
Presently, T-Mobile reported a Free Cash Flow of $12.9 Billion, serving as a solid starting point for these projections. Over the coming years, analysts expect cash flow to grow steadily, with projections reaching $23.4 Billion in 2029. Further out, extended estimates suggest Free Cash Flow could approach $29.9 Billion by 2035, based on moderate long-term growth assumptions. The model pulls in both near-term analyst forecasts and longer-term extrapolations to offer a full view of the company’s cash-generating potential.
After totaling and discounting these future cash flows, the DCF analysis arrives at an intrinsic value of $538.26 per share. This figure signals that the stock trades at a 57.9% discount to its estimated fair value, pointing to significant undervaluation at current prices.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests T-Mobile US is undervalued by 57.9%. 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 one of the most common tools for valuing profitable companies like T-Mobile US. It’s a quick way to compare how much investors are willing to pay for a dollar of current earnings, making it especially relevant for established businesses with a track record of positive profits. However, what counts as a "normal" or "fair" PE ratio depends on expectations for future growth and perceived risks. Companies with higher growth prospects or safer business models often justify higher PE ratios, while slower-growing or riskier companies tend to trade at lower multiples.
Currently, T-Mobile US trades at a PE ratio of 20.88x. This sits above the average among wireless telecom peers at 8.94x and also higher than the broader industry average of 18.03x. On the surface, this might make the stock seem a little pricey relative to its competitors. However, these benchmarks don’t always tell the full story because they ignore company-specific advantages like T-Mobile’s earnings growth, margins, and scale.
This is where Simply Wall St’s proprietary “Fair Ratio” metric comes in. The Fair Ratio, calculated at 17.53x for T-Mobile, incorporates factors such as the company’s expected earnings growth, profit margin, industry dynamics, and market cap. Because it’s tailored to the company’s unique profile and outlook, it offers a more precise sense of value than peer or industry comparisons alone. When we compare T-Mobile’s current PE of 20.88x to its Fair Ratio of 17.53x, the stock looks somewhat expensive on this metric, suggesting investors are paying a premium for its current prospects.
Result: OVERVALUED
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's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, interactive way for any investor to define their own story about T-Mobile US, what you believe about its future growth, margins, or industry position, then tie those beliefs directly to a tailored financial forecast and a fair value estimate.
Narratives bridge the gap between a company’s unique story and its numbers, enabling you to see how your individual assumptions shape investment decisions. This feature is available to everyone on Simply Wall St’s Community page, where millions of investors explore, share, and update their Narratives in real time.
By comparing your Narrative’s calculated Fair Value to the current market Price, you can easily judge whether it’s a good time to buy or sell. Because Narratives automatically update when new news or results are released, your outlook stays dynamic and relevant. For example, some T-Mobile US Narratives currently see fair value as low as $201, while the most optimistic put it at $309, reflecting how different perspectives and forecasts can dramatically influence your view of the stock’s opportunity.
For T-Mobile US, here are previews of two leading T-Mobile US Narratives:
Fair Value: $272.30
Current price is 16.8% below narrative fair value
Revenue Growth Rate: 5.3%
- Expansion in 5G and fiber broadband, strategic partnerships, and innovations are driving ongoing growth in revenue and margins.
- Analysts expect profit margins to rise significantly, with earnings reaching $17.3 billion by 2028, and the narrative assumes the company will trade at a lower future PE ratio than today's level.
- The narrative flags risks such as potential tariffs, increased competition, and the need for successful fiber expansion. It concludes with a consensus price target 10.9% above the current share price.
Fair Value: $201.69
Current price is 12.3% above narrative fair value
Revenue Growth Rate: 4.3%
- T-Mobile’s growth is led by its 5G expansion, home internet, and new business solutions, but the valuation is seen as rich at the current price.
- Risks highlighted include intense competition from AT&T and Verizon, regulatory and legal challenges, and the difficulty of maintaining customer retention amid market saturation.
- While margins may improve gradually and 5G/IoT trends are supportive, the narrative concludes that the stock could be fairly to slightly overvalued given its forward outlook and current PE ratio.
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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