Back to top

Image: Bigstock

T-Mobile (TMUS) to Report Q3 Earnings: Is a Beat in Store?

Read MoreHide Full Article

T-Mobile US, Inc. (TMUS - Free Report) is scheduled to report third-quarter 2020 results on Nov 5, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 454.6%. The bottom line surpassed the Zacks Consensus Estimate by 50 cents. T-Mobile delivered a trailing four-quarter positive earnings surprise of 125.5%, on average.

The Bellevue, WA-based wireless operator is expected to have recorded higher total revenues year over year, despite the COVID-19-related operating challenges. The performance is likely to have largely been driven by synergies accruing from the merger with Sprint, along with customer growth.

Factors at Play

During the third quarter, T-Mobile completed its previously announced divestiture of Sprint’s prepaid wireless business to DISH Network. The company expanded its Home Internet pilot to Kent, Muskegon and Ottawa county residents.

T-Mobile launched a commercial nationwide standalone architecture 5G network. Its mid-band 5G went live for millions of people in almost 210 cities and towns across the country, delivering peak download speed of up to 1 Gbps and an average speed of around 300 Mbps. T-Mobile’s 5G network covers more than 250 million people across 1.3 million square miles.

T-Mobile inked a new agreement with American Tower, enhancing its access to the latter’s U.S. sites and facilitating rapid deployment of nationwide 5G. It launched new Magenta for Business plans, with Microsoft 365 included at no extra charge on up to two lines per account. Also, the company upgraded its more than 7,000 retail stores to cater to the needs of small businesses across the country. Such developments are likely to have had a positive impact on the company’s top line.

However, merger-related costs, impacts of COVID-19 and non-cash impairments are expected to have put considerable pressure on the bottom line.

The Zacks Consensus Estimate for revenues from the Service segment, which account for the lion’s share of total revenues, is pegged at $13,494 million. This indicates an increase of 57.2% from the year-ago quarter’s reported figure. The consensus mark for revenues from Equipment stands at $4,417 million, suggesting growth of 102.1% year over year.

For the September quarter, the Zacks Consensus Estimate for total revenues is pegged at $18,299 million that indicates growth of 65.4% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at 54 cents, which suggests a decline of 53.4% year over year.

What Our Model Says

Our proven model predicts an earnings beat for T-Mobile this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: T-Mobile’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +23.45% as the former is pegged at 67 cents and the latter at 54 cents.

TMobile US, Inc. Price and EPS Surprise

TMobile US, Inc. Price and EPS Surprise

TMobile US, Inc. price-eps-surprise | TMobile US, Inc. Quote

Zacks Rank: T-Mobile currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

PennyMac Financial Services, Inc. (PFSI - Free Report) is slated to release third-quarter 2020 results on Nov 5. It has an Earnings ESP of +4.39% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Drainage Systems, Inc. (WMS - Free Report) is scheduled to release second-quarter fiscal 2021 results on Nov 5. The company has an Earnings ESP of +4.35% and a Zacks Rank #1.

Advanced Energy Industries, Inc. (AEIS - Free Report) has an Earnings ESP of +1.03% and a Zacks Rank of 1. The company is set to report third-quarter 2020 results on Nov 5.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>