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Analyst Blog

T-Mobile US, Inc. (TMUS - Snapshot Report) – the fourth largest telecom operator in the U.S. – is set to release its second-quarter 2013 results before the opening bell on Aug 8, 2013.

In the last quarter, the company delivered a 45.45% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

Continuous launch of attractive service plans coupled with inclusion of iPhones in its smartphone portfolio will act as catalysts for T-Mobile US, going forward. Moreover, the company’s recent merger with MetroPCS Communications, Inc. has also solved its longstanding spectrum shortage crisis, thereby helping T-Mobile US to deploy 4GLTE service across 100 markets.

However, intense competition from other carriers coupled with huge investment for the deployment of 4GLTE network may continue to erode margin and cash position of the company.

Earnings Whispers

Our proven model does not conclusively show that T-Mobile US is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate is 3 cents while the Zacks Consensus Estimate is higher at 7 cents. This leads to an ESP of -57.14% for T-Mobile US.

Zacks Rank #3 (Hold): T-Mobile US Zacks Rank #3, decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of -57.14% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.

Other Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

Leap Wireless International Inc. has Earnings ESP of +2.59% and carries a Zacks Rank #3 (Hold).

Comcast Corporation (CMCSA - Analyst Report) has Earnings ESP of +1.67% and carries a Zacks Rank #2 (Buy).

AT&T (T - Analyst Report) has Earnings ESP of +1.47% and carries a Zacks Rank #3 (Hold).

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