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T-Mobile US (TMUS): A Beat in Store this Earnings Season?
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U.S. national wireless carrier T-Mobile US Inc. (TMUS - Free Report) is slated to report third-quarter 2016 results, before the opening bell on Oct 25.
Last quarter, T-Mobile US posted a positive earnings surprise of 13.64%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 89.52%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that T-Mobile US is likely to beat estimates because it has the right combination of two key elements.
Zacks ESP: T-Mobile US has an Earnings ESP of +4.35%. This is because the Most Accurate estimate stands at 24 cents while the Zacks Consensus Estimate is pegged lower at 23 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: T-Mobile US has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
What is Driving the Better-than-Expected Earnings?
T-Mobile US continues to gain postpaid wireless customers, which has encouraged management to raise the subscriber gain outlook for 2016. In Sep 2016, the company provided a sneak peek into its third-quarter 2016 earnings report, wherein the company claimed to have added 753,000 branded postpaid customers since Jul 1, 2016, compared with the addition of 646,000 in the second quarter of 2016. The company has also reached out to 650,000 prepaid customers in the third quarter of 2016. T-Mobile US believes that its innovative network expansion methodologies have helped drive substantial consumer growth. In order to lure customers from competitors, the company has been launching several low-priced service plans through varied promotional and advertising schemes for individual consumers as well as small business entities. In relation to this, T-Mobile US announced a ‘Stock Up’ plan as part of its ‘Get Thanked’ program which involved the granting of a stock to postpaid customers. In Aug 2016, T-Mobile US came up with unlimited offerings – ‘T-Mobile One’ plan – for $70 a month, replacing its prior $95 unlimited plan.
T-Mobile US along with Ericsson (ERIC - Free Report) recently declared the results of their 5-Generation (‘5G’) trial, which includes a voice call among 4-Generation (‘4G’) and 5G networks. The company also signed a deal with Charter Communications Inc. (CHTR - Free Report) to acquire a license of 700 MHz A Block spectrum for Eastern Montana from the latter.
T-Mobile US operates in a highly competitive and saturated wireless market where success depends on technical superiority, quality of services and scalability. Hence, intense competition could limit the company’s ability to attract and retain customers and adversely affect its results. Moreover, such offers and discounted prices may dent the company’s margins. T-Mobile US has also been facing increased scrutiny into its working conditions by institutional investors.
Here’s a company that has the right combination of elements to post an earnings beat this quarter.
Apple Inc. (AAPL - Free Report) , with an earnings ESP of +1.21% and a Zacks Rank #2. The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters.
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T-Mobile US (TMUS): A Beat in Store this Earnings Season?
U.S. national wireless carrier T-Mobile US Inc. (TMUS - Free Report) is slated to report third-quarter 2016 results, before the opening bell on Oct 25.
Last quarter, T-Mobile US posted a positive earnings surprise of 13.64%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 89.52%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that T-Mobile US is likely to beat estimates because it has the right combination of two key elements.
Zacks ESP: T-Mobile US has an Earnings ESP of +4.35%. This is because the Most Accurate estimate stands at 24 cents while the Zacks Consensus Estimate is pegged lower at 23 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: T-Mobile US has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of T-Mobile US’s Zacks Rank #3 and +4.35% ESP makes us confident of an earnings beat at the company. You can see the complete list of today’s Zacks #1 Rank stocks here.
What is Driving the Better-than-Expected Earnings?
T-Mobile US continues to gain postpaid wireless customers, which has encouraged management to raise the subscriber gain outlook for 2016. In Sep 2016, the company provided a sneak peek into its third-quarter 2016 earnings report, wherein the company claimed to have added 753,000 branded postpaid customers since Jul 1, 2016, compared with the addition of 646,000 in the second quarter of 2016. The company has also reached out to 650,000 prepaid customers in the third quarter of 2016. T-Mobile US believes that its innovative network expansion methodologies have helped drive substantial consumer growth. In order to lure customers from competitors, the company has been launching several low-priced service plans through varied promotional and advertising schemes for individual consumers as well as small business entities. In relation to this, T-Mobile US announced a ‘Stock Up’ plan as part of its ‘Get Thanked’ program which involved the granting of a stock to postpaid customers. In Aug 2016, T-Mobile US came up with unlimited offerings – ‘T-Mobile One’ plan – for $70 a month, replacing its prior $95 unlimited plan.
T-Mobile US along with Ericsson (ERIC - Free Report) recently declared the results of their 5-Generation (‘5G’) trial, which includes a voice call among 4-Generation (‘4G’) and 5G networks. The company also signed a deal with Charter Communications Inc. (CHTR - Free Report) to acquire a license of 700 MHz A Block spectrum for Eastern Montana from the latter.
T-Mobile US operates in a highly competitive and saturated wireless market where success depends on technical superiority, quality of services and scalability. Hence, intense competition could limit the company’s ability to attract and retain customers and adversely affect its results. Moreover, such offers and discounted prices may dent the company’s margins. T-Mobile US has also been facing increased scrutiny into its working conditions by institutional investors.
T-MOBILE US INC Price and EPS Surprise
T-MOBILE US INC Price and EPS Surprise | T-MOBILE US INC Quote
A Key Pick
Here’s a company that has the right combination of elements to post an earnings beat this quarter.
Apple Inc. (AAPL - Free Report) , with an earnings ESP of +1.21% and a Zacks Rank #2. The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>