T-Mobile US Inc (NASDAQ:TMUS) released an all-around solid first-quarter earnings report on Monday that bulls should be loving right now. While TMUS stock is barely budging, it’s hard to question the results — T-Mobile not only beat on the top and bottom lines, but the company also issued strong guidance, suggesting it sees no signs of slowing down.
Right now, T-Mobile stock looks as much a buy as it ever has.
Can You Hear the Profits Now?
Ahead of the quarter, TMUS stock — which traded near 52-week highs — was on fire, climbing 12.5% year-to-date amid a 60%-plus surge over the past year. Analysts were hesitant to raise their price targets, but now they have no choice. With the company still taking subscribers away from larger rivals Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T), TMUS stock offers tons of reasons to remain dialed in.
In the three months that ended March, The Bellevue, Washington-based company reported a surge in net income, reaching $698 million (80 cents per share), compared to $479 million (56 cents per share) a year earlier and crushing Wall Street’s estimates of 34 cents per share. T-Mobile’s revenue rose nearly 11% YOY to $9.61 billion, topping last year’s mark of $8.6 billion and consensus estimates of $9.6 billion.
CEO John Legere has touted that for the past three years his company had “taken all of the postpaid phone growth in the industry.” In that vein, T-Mobile affirmed its swagger Monday, reporting during the quarter that it secured “industry leading customer growth,” with 1.1 million total net additions and $7.3 billion in service revenue, a rise of 11%.
The company’s top- and bottom-line beats were driven by the company’s gain of 914,000 net post-paid phone subscribers (who pay traditional monthly phone bills), which TMUS said it expects to lead the industry for the fifth consecutive quarter. T-Mobile also added 386,000 net prepaid accounts and 798,000 branded postpaid phone net additions, which it says captures more than 250% of industry growth.
T-Mobile’s success likely come at the expense of Verizon, which last week reported earnings and revenue that missed analysts’ expectations. The nation’s largest wireless carrier, which on the news saw its stock decline more than 2%, has been unable to stop the shrinking of its top and bottom line.
It’s a different story in Bellevue.
“We’ve been beating up on the competition for over 4 years now while making wireless better for consumers,” CEO John Legere said. “Q1 was no different with T-Mobile again producing the best customer and financial growth in the industry.
The wireless industry, where unlimited data plans and discounted pricing drives carriers’ campaigns, is competitive, if not cutthroat. Yet, T-Mobile, which has eliminated taxes and fees from its pricing model, manages to grow subscribers without undercutting its bottom line.
This underscores how confident T-Mobile is with its strategy.
Bottom Line on TMUS Stock
T-Mobile has risen 71% from its 52-week low of $38.47 as the company operates on all cylinders.
Given that the company is still in the midst of rolling out several new initiatives such as free video-streaming promotions like Binge On and unlimited data plans to families, which are aimed at luring customers away from AT&T and Verizon, parting with TMUS stock seems riskier than holding the shares at their current highs.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.