A Look at T-Mobile’s Earnings Trends

In the last few quarters, T-Mobile (TMUS) has managed to beat analysts’ EPS (earnings per share) estimates. T-Mobile delivered another solid quarter in 4Q16, with strong subscriber metrics and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth. T-Mobile added 1.2 million net postpaid customers, with 933,000 postpaid phone net adds. The company also added 541,000 prepaid customers.

T-Mobile’s earnings grew significantly YoY (year-over-year) in 4Q16. T-Mobile’s earnings were ~55.2% higher than what Wall Street had anticipated for 4Q16. T-Mobile’s EPS rose ~32.4% YoY to reach $0.45 in 4Q16, compared with $0.34 in 4Q15. The YoY growth in this metric was driven by expansion in the telecom company’s margins. Note that earnings in 4Q15 included an after-tax extraordinary gain of $0.10 per share on spectrum license transactions.

Let’s look at T-Mobile’s earnings versus analysts’ 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 five quarters.

Last quarter was much better for T-Mobile than for its major competitors. In 4Q16, Verizon’s (VZ) adjusted EPS fell ~3.4% YoY to reach $0.86. AT&T’s (T) adjusted EPS rose ~4.8% YoY to reach $0.66. Sprint (S) managed net postpaid phone subscriber additions of 368,000 in fiscal 3Q16 (quarter ended December 2016), which came at the expense of Verizon and AT&T. In the next part, we’ll look at T-Mobile’s revenue growth in 4Q16.