Since taking a tumble back in June, T-Mobile (TMUS) rose after it released third-quarter earnings, reporting its best quarter in terms of customer growth. Is now a good time to buy TMUS stock?
Company Profile
T-Mobile is the fourth largest wireless carrier in the U.S. T-Mobile provides wireless voice, messaging, and data services in the U.S. T-Mobile offers a range of products and services, including games and applications for mobiles; Internet and e-mail; messaging; and music and sounds.
T-Mobile employs 40,000 full-time employees and brought in more than $24 billion in sales last year. T-Mobile is headquartered in Bellevue, Washington and is a subsidiary of Deutsche Telekom (DTEGY).
Earnings Rundown
T-Mobile delivered strong third-quarter results in terms of subscriber growth. T-Mobile added a record 1.4 million postpaid customers. Total customers for the quarter was 52.9 million, a 4.3% increase from the second quarter and a 19% increase over the last six quarters.
T-Mobile’s quarterly revenue increased 10% year-over-year to $7.35 billion and was in line with analyst estimates. Service revenue also increased 10.6% year-over-year to $5.7 billion. The mobile carrier also reported a net loss of 12 cents per share, compared with 5 cents the previous year. T-Mobile missed analysts’ consensus earnings estimate of 2 cents per share.
For the full year, T-Mobile estimates adjusted EBITDA to be between $5.6 billion to $5.8 billion. For the current year, T-Mobile also expects to add in 4.3 million to 4.7 million customers, beating its previous estimates of 3.0 million to 3.5 million.
Current Ratings
TMUS had a pretty good run for the first half of 2014, staying in “buy” territory through May, but with increased market volatility as of late, it’s not surprising to see TMUS’s buying pressure impacted.
T-Mobile stock currently receives a “C” for its Quantitative Grade. T-Mobile’s fundamental metrics are also mixed. While the company receives strong marks for earnings surprises (A), analyst earnings revisions (A), and sales growth (B), there are other areas where the mobile carrier can improve.
Operating margin growth, earnings growth, earnings momentum, and cash flow all earn “Cs,” while return on equity receives a “D.” TMUS receives a “B” for its overall fundamentals.
Bottom Line
As of this posting, Oct. 29, I consider TMUS a “C-rated hold.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
