uploads///T Mobile Q Pre Adjusted EPS Estimate

Could T-Mobile Continue Its Earnings Growth in 4Q16?

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Feb. 2 2017, Updated 7:39 a.m. ET

T-Mobile’s earnings in 4Q16

T-Mobile (TMUS) plans to report its results for 4Q16 on February 8, 2017. In this series, we’ll take a look at the expectations for the company’s performance during the quarter. Wall Street expects the company’s earnings to fall in 4Q16. Analysts expect T-Mobile’s adjusted earnings per share (or EPS) to reach $0.29 in 4Q16 compared with its EPS of $0.34 in 4Q15.

In 3Q16, T-Mobile’s earnings grew significantly YoY (year-over-year). T-Mobile’s earnings were ~90.9% higher than what Wall Street had anticipated for 3Q16. T-Mobile’s EPS increased ~180% YoY to reach $0.42 in 3Q16 from $0.15 in 3Q15.

Excluding the extraordinary gain of $0.15 on the spectrum license transactions, T-Mobile’s pro-forma EPS would have grown ~80% to $0.27. The YoY growth in this metric is driven by YoY expansion in the telecom company’s margins.

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T-Mobile’s consensus versus actual earnings

Now, let’s look at T-Mobile’s earnings versus analyst consensus estimates in recent quarters. As we can see in the above bar chart, Wall Street’s estimates of the telecom company’s earnings were conservative in the last four quarters.

T-Mobile had a much better quarter than its major competitors. In 3Q16, Verizon’s (VZ) adjusted EPS fell ~2.9% YoY to reach $1.01. AT&T (T) posted adjusted EPS of $0.74 and stayed flat from the same quarter last year. Sprint (S) managed net postpaid phone subscriber additions of 347,000, which came at the expense of Verizon and AT&T.

In the next part, we’ll look at how much revenue growth we can expect from T-Mobile in 4Q16.

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