Wondering whether now is the right time to make a move with T-Mobile US stock? You’re not alone. With the share price closing at $226.45 recently, investors are taking a closer look, especially after a bumpy ride in recent weeks. Over the last seven days, T-Mobile shares eked out a modest 0.1% gain, but the picture broadens quickly. The stock slipped 4.7% over the past month, yet is still up 3.2% year-to-date and has soared 71.5% across three years, and an even more impressive 108.9% over five years. That kind of long-term growth does not just happen in a vacuum.
Some of this momentum is rooted in industry buzz. Recent headlines about auto tariffs and shifts in U.S. manufacturing could affect everything from consumer behavior to demand for wireless data, even if the link is not always obvious in the short term. In the bigger picture, investors are also zeroing in on how the market values T-Mobile today, especially considering its transformation into a dominant player with stakes in 5G and beyond.
On the valuation front, T-Mobile currently clocks a value score of 3 out of 6. This means it comes up undervalued on half of six major tests, but there is more to the story than a single number can tell. In the next section, we will dive into what those checks are and why thinking differently about valuation might be the key to seeing even greater opportunity here.
Why T-Mobile US is lagging behind its peers
Approach 1: T-Mobile US Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model calculates a company’s value by projecting its future free cash flows and discounting them back to today’s dollars. This gives investors a sense of what the business is intrinsically worth right now. In T-Mobile US’s case, the model starts with its latest twelve-month free cash flow, which stands at approximately $12.9 billion. This is projected to grow significantly by 2029, with analysts forecasting free cash flow to reach around $23.6 billion in that year. While analyst coverage typically only goes out five years, Simply Wall St extrapolates further and estimates that annual free cash flows could exceed $30.5 billion ten years into the future, all quoted in US dollars.
Based on these cash flow projections and discounting the future values using a 2 Stage Free Cash Flow to Equity approach, the DCF valuation suggests an intrinsic value of $547.08 per share. With the stock recently trading at $226.45, this implies T-Mobile US is trading at a 58.6% discount to its fair value, which suggests the shares may be significantly undervalued at current prices.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests T-Mobile US is undervalued by 58.6%. 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 metric for profitable companies like T-Mobile US, as it allows investors to see how much they are paying for each dollar of earnings. The PE ratio works best for stable businesses where profits are recurring. This makes it a useful tool for comparing companies within the same industry or assessing an individual stock against market expectations.
It is important to note that "normal" or "fair" PE ratios are influenced by a company’s growth prospects, profitability, size, and risk factors. Higher expected growth or lower risk typically justifies a higher PE, while lower growth or higher risk supports a lower figure. T-Mobile US currently trades at a PE multiple of 20.86x. This is above the Wireless Telecom industry average of 18.05x and also higher than the peer average of 9.33x. This points to a market willingness to pay a premium for T-Mobile's earnings.
Simply Wall St provides a proprietary “Fair Ratio” metric, which calculates what a balanced PE should be by factoring in a company’s earnings growth, profit margin, industry, market capitalization, and risk level. Unlike simple peer or industry averages, the Fair Ratio offers a more tailored benchmark for assessing the stock’s valuation. For T-Mobile US, the Fair Ratio is 17.67x. Since the current PE (20.86x) is moderately above this fair value, it suggests the stock is a bit overvalued on this basis.
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 there is an even better way to understand valuation, so let’s introduce you to Narratives, a smarter approach that goes beyond static numbers by connecting a company’s story with your own forecasts and a calculated fair value.
A Narrative is a simple, accessible tool that lets you map out your view of T-Mobile US, linking your expectations on revenue, earnings, and margins to a fair value estimate, all backed by your perspective on what’s driving the business.
Rather than relying solely on ratios or models, Narratives help investors see the "why" behind the numbers, track how their story about T-Mobile changes over time, and make more informed decisions on when to buy or sell, especially as Fair Value is compared to the current Price right on the Simply Wall St Community page.
These Narratives update automatically as new news or financials are released, ensuring your investment thesis evolves with T-Mobile US itself.
For example, some investors believe 5G, fiber expansion, and subscriber growth will push T-Mobile’s shares as high as $309, while others, more focused on competitive and economic headwinds, see Fair Value as low as $200, demonstrating how your outlook and story can lead to a different investment decision.
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.
Valuation is complex, but we're here to simplify it.
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