T-Mobile (TMUS): Exploring Valuation After Recent Share Price Decline

T-Mobile US (TMUS) shares have seen a slight move recently, prompting some investors to take a closer look at the company’s underlying performance. Over the past month, TMUS stock has declined by 9%, and it remains up 12% over the last year.

See our latest analysis for T-Mobile US.

T-Mobile’s steady 12% total shareholder return over the past year suggests momentum is still on its side, despite a recent dip in its share price. While the one-month share price return has softened, the longer-term performance indicates investors have generally been rewarded for their patience. This hints at underlying growth potential and ongoing confidence in the business.

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With shares trading below analyst price targets and the company showing solid annual growth, the question now is whether T-Mobile remains undervalued or if the market has already accounted for future gains in the current price.

Most Popular Narrative: 15% Undervalued

T-Mobile's widely followed narrative indicates a fair value well above the recent closing price of $230.27. This points to a sizable gap between what the market pays and what the narrative projects, setting the stage for a deeper dive into what is driving such a strong valuation call.

*Innovations such as the rollout of 5G Advanced and T-Satellite, along with enhancements in digital platforms like T-Life, signal operational improvements that could drive margin expansion and future earnings growth. Escalating postpaid ARPA expectations and targeted price optimizations could lead to a rise in average revenue per user, enhancing revenue and gross margins.*

Read the complete narrative.

Curious what big financial levers justify this potential upside? The narrative pins its optimism on aggressive revenue targets and higher margins, combined with a bold future multiple that rivals industry standouts. Want to see what assumptions really drive this bullish take?

Result: Fair Value of $272.30 (UNDERVALUED)

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

However, potential headwinds remain, such as heightened industry churn or tariffs on handsets. Either of these factors could impact T-Mobile’s growth and valuation outlook.

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

Another View: Looking at the Numbers Through a Different Lens

While analyst models suggest T-Mobile is undervalued, the market’s price-to-earnings ratio of 21.2x tells a different story. That is higher than both global industry peers at 18.2x and the fair ratio of 17.5x, hinting at valuation risk if the market reverts. Could optimism be overdone?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own T-Mobile US Narrative

If you see things differently or want to dig into the numbers yourself, you can build your own view in just a few minutes with 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.

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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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