We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
T-Mobile (TMUS) Down 4% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
It has been about a month since the last earnings report for T-Mobile (TMUS - Free Report) . Shares have lost about 4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is T-Mobile due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
T-Mobile Beats on Q4 Earnings Despite Lower Revenues
T-Mobile reported relatively modest fourth-quarter 2022 results with healthy customer growth driven by diligent execution of operational plans. The Bellevue, WA-based company delivered industry-leading growth in postpaid and broadband customers driven by its 5G network and best-value combination with a focus on customers. However, the top line missed the Zacks Consensus Estimate while the bottom line beat the same.
Net Income
Net income in the quarter was $1,477 million or $1.18 per share compared with $422 million or 34 cents per share in the prior-year quarter. The significant year-over-year improvement despite top-line contraction was primarily attributable to lower operating expenses. The bottom line beat the Zacks Consensus Estimate by 8 cents.
In full-year 2022, T-Mobile recorded net income of $2,590 million or $2.06 per share compared with $3,024 million or $2.41 per share in 2021.
Revenues
Quarterly total revenues declined to $20,273 million from $20,785 million despite a healthy improvement in service revenues due to lower equipment revenues owing to a challenging macroeconomic environment. The top line lagged the consensus estimate of $20,873 million.
Total revenues in 2022 decreased to $79,571 million from $80,118 million as lower equipment revenues more than offset growth in service revenues.
Segment Results
Total Service revenues in the reported quarter grew 3.7% year over year to $15,518 million, led by Postpaid service revenue growth of 6.9% ($11,725 million) driven by higher customer account and average revenue per account (ARPA). T-Mobile recorded 1.8 million postpaid net customer additions and 927,000 postpaid phone net customer additions in the quarter for respective tallies of 6.4 million (record high) and 3.1 million in 2022. Postpaid phone average revenue per user (ARPU) improved 1.7% year over year to $48.86, led by premium services, including Magenta MAX.
Prepaid revenues declined 1% to $2,449 million despite net customer additions of 25,000 in the quarter. Prepaid ARPU declined 2.6% to $38.29. Wholesale and other service revenues were $1,344 million, down 11.9% year over year. The company recorded high-speed Internet net customer additions of 524,000 in the quarter for 2.6 million customers by the end of 2022.
Equipment revenues totaled $4,451 million, down 19.2% year over year. Other revenues were $304 million, down from $316 million a year ago.
Other Details
Total operating expenses decreased to $17,526 million from $19,722 million in the year-ago quarter. Consequently, operating income improved to $2,747 million from $1,063 million. T-Mobile recorded an adjusted EBITDA of $6,828 million compared with $6,302 million a year ago.
Cash Flow & Liquidity
In 2022, T-Mobile generated $16,781 million of cash from operating activities compared with $13,917 million in 2021. Free cash flow in 2022 improved to $7,656 million from $5,646 million in the prior year on higher operating cash flow.
As of Dec 31, 2022, the company had $4,507 million in cash and cash equivalents with $65,301 million of long-term debt compared with respective tallies of $6,631 million and $67,076 million in the year-ago period. During the quarter, T-Mobile repurchased 16.5 million shares for $2.3 billion to bring the tally for 2022 to 21.4 million shares for $3.0 billion. The company has a remaining authorization of up to $11.0 billion worth of share repurchases through the end of September 2023.
2023 Guidance
T-Mobile has offered initial guidance for 2023. The company expects postpaid net customer additions between 5 million and 5.5 million. Core adjusted EBITDA (adjusted EBITDA less lease revenues) is estimated to be between $28.7 billion and $29.2 billion. It anticipates cash from operating activities within $17.8 billion to $18.3 billion.
Cash purchases of property and equipment, including capitalized interest, are projected between $9.4 billion and $9.7 billion, while free cash flow is estimated in the $13.1 billion to $13.6 billion range. Merger synergies are expected in the range of $7.2 billion to $7.5 billion for 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, T-Mobile has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, T-Mobile has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
T-Mobile (TMUS) Down 4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for T-Mobile (TMUS - Free Report) . Shares have lost about 4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is T-Mobile due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
T-Mobile Beats on Q4 Earnings Despite Lower Revenues
T-Mobile reported relatively modest fourth-quarter 2022 results with healthy customer growth driven by diligent execution of operational plans. The Bellevue, WA-based company delivered industry-leading growth in postpaid and broadband customers driven by its 5G network and best-value combination with a focus on customers. However, the top line missed the Zacks Consensus Estimate while the bottom line beat the same.
Net Income
Net income in the quarter was $1,477 million or $1.18 per share compared with $422 million or 34 cents per share in the prior-year quarter. The significant year-over-year improvement despite top-line contraction was primarily attributable to lower operating expenses. The bottom line beat the Zacks Consensus Estimate by 8 cents.
In full-year 2022, T-Mobile recorded net income of $2,590 million or $2.06 per share compared with $3,024 million or $2.41 per share in 2021.
Revenues
Quarterly total revenues declined to $20,273 million from $20,785 million despite a healthy improvement in service revenues due to lower equipment revenues owing to a challenging macroeconomic environment. The top line lagged the consensus estimate of $20,873 million.
Total revenues in 2022 decreased to $79,571 million from $80,118 million as lower equipment revenues more than offset growth in service revenues.
Segment Results
Total Service revenues in the reported quarter grew 3.7% year over year to $15,518 million, led by Postpaid service revenue growth of 6.9% ($11,725 million) driven by higher customer account and average revenue per account (ARPA). T-Mobile recorded 1.8 million postpaid net customer additions and 927,000 postpaid phone net customer additions in the quarter for respective tallies of 6.4 million (record high) and 3.1 million in 2022. Postpaid phone average revenue per user (ARPU) improved 1.7% year over year to $48.86, led by premium services, including Magenta MAX.
Prepaid revenues declined 1% to $2,449 million despite net customer additions of 25,000 in the quarter. Prepaid ARPU declined 2.6% to $38.29. Wholesale and other service revenues were $1,344 million, down 11.9% year over year. The company recorded high-speed Internet net customer additions of 524,000 in the quarter for 2.6 million customers by the end of 2022.
Equipment revenues totaled $4,451 million, down 19.2% year over year. Other revenues were $304 million, down from $316 million a year ago.
Other Details
Total operating expenses decreased to $17,526 million from $19,722 million in the year-ago quarter. Consequently, operating income improved to $2,747 million from $1,063 million. T-Mobile recorded an adjusted EBITDA of $6,828 million compared with $6,302 million a year ago.
Cash Flow & Liquidity
In 2022, T-Mobile generated $16,781 million of cash from operating activities compared with $13,917 million in 2021. Free cash flow in 2022 improved to $7,656 million from $5,646 million in the prior year on higher operating cash flow.
As of Dec 31, 2022, the company had $4,507 million in cash and cash equivalents with $65,301 million of long-term debt compared with respective tallies of $6,631 million and $67,076 million in the year-ago period. During the quarter, T-Mobile repurchased 16.5 million shares for $2.3 billion to bring the tally for 2022 to 21.4 million shares for $3.0 billion. The company has a remaining authorization of up to $11.0 billion worth of share repurchases through the end of September 2023.
2023 Guidance
T-Mobile has offered initial guidance for 2023. The company expects postpaid net customer additions between 5 million and 5.5 million. Core adjusted EBITDA (adjusted EBITDA less lease revenues) is estimated to be between $28.7 billion and $29.2 billion. It anticipates cash from operating activities within $17.8 billion to $18.3 billion.
Cash purchases of property and equipment, including capitalized interest, are projected between $9.4 billion and $9.7 billion, while free cash flow is estimated in the $13.1 billion to $13.6 billion range. Merger synergies are expected in the range of $7.2 billion to $7.5 billion for 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, T-Mobile has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, T-Mobile has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.