It has been about a month since the last earnings report for T-Mobile (TMUS Quick QuoteTMUS - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is T-Mobile due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for T-Mobile US, Inc. before we dive into how investors and analysts have reacted as of late.

TMUS Q1 Earnings Beat Estimates on Strong Service Revenue Growth

T-Mobile reported first-quarter 2026 earnings of $2.70 per share, beating the Zacks Consensus Estimate of $2.06 by 31.07%. Earnings increased 4.7% from the year-ago quarter’s $2.58.

Total revenues of $23.11 billion topped the consensus mark of $22.96 billion by 0.63% and rose 10.6% year over year. The upside was primarily driven by strong service revenue growth and continued expansion in postpaid accounts and ARPA.

TMUS Posts Strong Service Revenue Growth

T-Mobile generated total service revenues of $18.83 billion in the first quarter, reflecting an 11.3% year-over-year increase. This growth was fueled by higher postpaid service revenues, which climbed 15% to $15.63 billion.

The expansion in service revenues was supported by an increase in postpaid accounts and higher average revenue per account (ARPA). Postpaid ARPA rose 3.9% year over year to $151.93, indicating sustained monetization of its customer base.

T-Mobile Drives Account Growth and ARPA Expansion

T-Mobile reported postpaid net account additions of 217,000 in the quarter, up 6% year over year, highlighting continued customer momentum. Total postpaid accounts reached 34.4 million at quarter-end.

Growth was driven by higher gross additions, including contributions from prior acquisitions and broadband offerings, partially offset by increased industry switching. As shown in the investor factbook (page 4), account growth continues to trend upward despite seasonal softness in sequential additions. 

ARPA growth remained a key driver, supported by pricing optimization, increased customers per account and adoption of bundled services such as 5G broadband.

TMUS Profitability Adversely Impacted by Higher Costs

Operating income declined to $4.50 billion from $4.80 billion in the prior-year quarter, reflecting higher operating expenses. Total operating expenses rose to $18.61 billion from $16.09 billion.

Cost pressures were driven by the higher cost of equipment sales and increased depreciation and amortization, partly linked to network investments and merger-related impacts. Net income declined 15.2% year over year to $2.50 billion, primarily due to UScellular-related costs. 

Despite these headwinds, the company maintained strong profitability metrics, supported by revenue growth and disciplined cost management in other areas.

T-Mobile Delivers Strong Cash Flow and EBITDA Growth

Core adjusted EBITDA increased 11.9% year over year to $9.24 billion, underscoring solid operating performance. The company also generated $7.22 billion in operating cash flow, up 5.5% from the prior year.

Adjusted free cash flow rose 5% to $4.6 billion, reflecting efficient capital deployment and strong underlying business fundamentals. These metrics highlight T-Mobile’s ability to convert revenue growth into cash generation.

Additionally, the company returned $6 billion to shareholders during the quarter through share repurchases and dividends, reinforcing its commitment to capital returns.

TMUS Balance Sheet and Capital Allocation Trends

T-Mobile ended the quarter with total assets of $214.67 billion and cash and cash equivalents of $3.52 billion. Long-term debt was $83.81 billion, reflecting ongoing investments and acquisition-related financing.

The company continues to allocate capital toward network expansion and acquisitions, including the UScellular wireless business. These investments are aimed at strengthening its competitive positioning and supporting long-term growth.

Management also increased its 2026 shareholder return authorization to $18.2 billion, signaling confidence in future cash flow generation.

T-Mobile Outlook Supported by Strong Momentum

Management raised its full-year 2026 outlook following a strong first-quarter performance. T-Mobile now expects postpaid net account additions of 950,000 to 1.05 million, reflecting continued customer growth momentum.  The company reiterated its expectation for full-year service revenue of approximately $77 billion, implying about 8% growth, with second-quarter service revenue projected at roughly $19 billion, up 9% year over year. 

T-Mobile also increased its core adjusted EBITDA guidance to $37.1 billion–$37.5 billion, raising the lower end of the range by $100 million. Second-quarter core adjusted EBITDA is expected to be about $9.4 billion, implying 10% year-over-year growth.
 
Adjusted free cash flow is now expected in the range of $18.1 billion to $18.7 billion for full-year 2026, also up $100 million at the low end. Capital expenditures are projected to remain around $10 billion. Overall, the updated guidance reflects sustained strength in postpaid growth, ARPA expansion and network-driven differentiation, positioning T-Mobile for another year of solid financial performance.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, T-Mobile has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock has a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. Interestingly, T-Mobile has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

T-Mobile belongs to the Zacks Wireless National industry. Another stock from the same industry, Verizon Communications (VZ Quick QuoteVZ - Free Report) , has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Verizon reported revenues of $34.44 billion in the last reported quarter, representing a year-over-year change of +2.9%. EPS of $1.28 for the same period compares with $1.19 a year ago.

For the current quarter, Verizon is expected to post earnings of $1.28 per share, indicating a change of +4.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.

Verizon has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.