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T-Mobile Surges 41.2% in a Year: Should You Buy the Stock?
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T-Mobile US, Inc. (TMUS - Free Report) has gained 41.2% over the past year compared with the industry’s growth of 27.6%. The company has outperformed its peers like AT&T, Inc. (T - Free Report) and Verizon Communications, Inc. (VZ - Free Report) .
T-Mobile continues to boast a leadership position in the 5G market. The company’s 5G network covers 98% of Americans, or 330 million people in the country. Its Ultra Capacity 5G delivers superfast speeds, powering 5G smartphones and enabling innovators to deliver transformational 5G experiences. Strong growth in free cash flow and cost discipline initiatives are tailwinds.
Image Source: Zacks Investment Research
TMUS Rides on Healthy Demand, Strategic Acquisitions
T-Mobile is benefiting from solid postpaid customer growth over the past several quarters. In the third quarter of 2024, the company’s postpaid net customer additions were 1.6 million, and postpaid net account additions were 315,000, both metrics being the best in the industry.
Its strategy to challenge conventional Internet service provider practices by quickly addressing user pain points highlights its customer-first approach. The company launched innovative 5G Internet plans that address issues, including unexpected price hikes, hidden charges and confusing promotional pricing that inflates Internet bills. It is placing a strong emphasis on improving customer service through enhancing transparency and clarity in the whole process.
TMUS is collaborating with Starlink to launch a direct-to-cell satellite service in the United States. The collaboration aims to remove issues like network dead zones and bring remote and sparsely populated areas under network coverage.
The company’s acquisition strategy has significantly bolstered its position in the wireless industry over the past few years. The buyout of Sprint has immensely increased its network capacity, enabling TMUS to leapfrog the competition in network capability and customer experience. TMUS is also set to acquire U.S. Cellular’s wireless operations, along with 30% of its spectrum assets across several spectrum bands. The transaction will enable T-Mobile to expand both its fast-growing home broadband offerings and fixed wireless products through the additional capacity.
TMUS Affected by Fierce Competition
The U.S. wireless market is highly competitive and saturated. Intensifying competition with a relatively fixed pool of customers is putting pressure on pricing. It could limit the company’s ability to attract and retain customers and may adversely affect its operating and financial results. To lure customers from competitors, T-Mobile has launched several low-priced service plans for consumers as well as small business entities. This strategy strains the margin.
End Note
T-Mobile is well positioned to gain from solid 5G traction and growing demand for its wireless services. Its customer-oriented strategy bodes well for long-term growth. Strong growth in free cash flow accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives.
However, stiff competition remains a major concern for the company. With a Zacks Rank #3 (Hold), TMUS appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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T-Mobile Surges 41.2% in a Year: Should You Buy the Stock?
T-Mobile US, Inc. (TMUS - Free Report) has gained 41.2% over the past year compared with the industry’s growth of 27.6%. The company has outperformed its peers like AT&T, Inc. (T - Free Report) and Verizon Communications, Inc. (VZ - Free Report) .
T-Mobile continues to boast a leadership position in the 5G market. The company’s 5G network covers 98% of Americans, or 330 million people in the country. Its Ultra Capacity 5G delivers superfast speeds, powering 5G smartphones and enabling innovators to deliver transformational 5G experiences. Strong growth in free cash flow and cost discipline initiatives are tailwinds.
Image Source: Zacks Investment Research
TMUS Rides on Healthy Demand, Strategic Acquisitions
T-Mobile is benefiting from solid postpaid customer growth over the past several quarters. In the third quarter of 2024, the company’s postpaid net customer additions were 1.6 million, and postpaid net account additions were 315,000, both metrics being the best in the industry.
Its strategy to challenge conventional Internet service provider practices by quickly addressing user pain points highlights its customer-first approach. The company launched innovative 5G Internet plans that address issues, including unexpected price hikes, hidden charges and confusing promotional pricing that inflates Internet bills. It is placing a strong emphasis on improving customer service through enhancing transparency and clarity in the whole process.
TMUS is collaborating with Starlink to launch a direct-to-cell satellite service in the United States. The collaboration aims to remove issues like network dead zones and bring remote and sparsely populated areas under network coverage.
The company’s acquisition strategy has significantly bolstered its position in the wireless industry over the past few years. The buyout of Sprint has immensely increased its network capacity, enabling TMUS to leapfrog the competition in network capability and customer experience. TMUS is also set to acquire U.S. Cellular’s wireless operations, along with 30% of its spectrum assets across several spectrum bands. The transaction will enable T-Mobile to expand both its fast-growing home broadband offerings and fixed wireless products through the additional capacity.
TMUS Affected by Fierce Competition
The U.S. wireless market is highly competitive and saturated. Intensifying competition with a relatively fixed pool of customers is putting pressure on pricing. It could limit the company’s ability to attract and retain customers and may adversely affect its operating and financial results. To lure customers from competitors, T-Mobile has launched several low-priced service plans for consumers as well as small business entities. This strategy strains the margin.
End Note
T-Mobile is well positioned to gain from solid 5G traction and growing demand for its wireless services. Its customer-oriented strategy bodes well for long-term growth. Strong growth in free cash flow accentuates efficient capital management and implies that the company is well-positioned to invest in growth initiatives.
However, stiff competition remains a major concern for the company. With a Zacks Rank #3 (Hold), TMUS appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.