T-Mobile (TMUS): Valuation in Focus After Earnings Beat, Higher Capex, and Investor Caution

T-Mobile US (TMUS) reported earnings and revenue ahead of expectations. However, its disclosure of a major impairment charge and a planned increase in capital spending for 2025 has stirred investor concern. Shares have lagged behind wireless rivals as sentiment responds to mixed signals.

See our latest analysis for T-Mobile US.

After beating earnings estimates, T-Mobile’s share price has failed to bounce, down 17% over the past three months and delivering a -14% total shareholder return for the year. Momentum has clearly faded despite upbeat news about subscriber gains, new digital tools, and customer perks. Investors are weighing the impact of higher spending and an industry that is getting more competitive.

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With shares trading at a significant discount to analyst targets and the company posting steady subscriber growth, investors are left wondering if T-Mobile is now undervalued or if the market is already factoring in all future gains.

Most Popular Narrative: 24% Undervalued

T-Mobile US closed significantly below the narrative fair value estimate. This suggests fresh upside if the scenario plays out as projected by consensus. The narrative points to robust business catalysts and a valuation gap that is not reflected in the latest price trends.

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.

Read the complete narrative.

Could these technology bets power future earnings in ways the market has not fully priced in? The narrative’s numbers are built on bold projections for revenue, margins, and future share repurchases. Curious about which key financial metrics make this valuation tick? Delve deeper to uncover the driving forces behind this compelling valuation call.

Result: Fair Value of $275 (UNDERVALUED)

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

However, risks remain, including potential industry-wide churn and competitive promotions. Either of these factors could pressure T-Mobile's future revenue growth and profitability.

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

Another View: What Do Earnings Ratios Suggest?

Looking at typical earnings ratios gives a different perspective. T-Mobile is trading at 19.7 times earnings, which is higher than the industry average of 18.4 and well above the fair ratio of 16.5. This higher valuation hints at extra optimism, but does it create caution or signal opportunity if the market decides to catch up?

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

Build Your Own T-Mobile US Narrative

If you think the numbers tell a different story or want to dig into the details yourself, you can create 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 4 key rewards and 1 important warning sign 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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