Inside T-Mobile’s Scale and Valuation after 1Q17
In this part of our series, we’ll look at some value-centric measurements for T-Mobile (TMUS) among its major peers in the US wireless space. We’ll start with the size of the top four US wireless carriers: Verizon Communications (VZ), AT&T (T), T-Mobile, and Sprint (S).
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As of April 13, 2017, AT&T was the largest US telecom player, while Verizon was the second-largest, and T-Mobile was the third-largest player by market capitalization. Sprint’s market capitalization remained lower than T-Mobile’s.
T-Mobile’s valuation multiples
Remember, price-based multiples take into account value from a shareholder’s perspective, while EV (enterprise value) multiples help investors understand the value of a company via its sources of capital, from a shareholder’s point of view. Both are forward multiples based on expected values after one year.
On April 13, 2017, T-Mobile was trading at a forward PE (price-to-earnings) multiple of ~25.96x, which was higher than that of Verizon and AT&T, which had PE multiples of ~12.37x and ~13.32x, respectively.
T-Mobile’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) metric most recently came in at ~6.71x, which is larger than Sprint’s ~5.83x, Verizon’s ~6.67x and AT&T’s ~6.70x.
In the next and final part of this series, we’ll look at analysts’ recommendations for T-Mobile stock.