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Analyzing T-Mobile’s Valuation Multiples

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Updated

T-Mobile’s scale

At the end of May 14, T-Mobile (TMUS) had a market cap of ~$47.8 billion. In the US wireless carrier industry, AT&T (T) leads with a market cap of ~$197.7 billion, followed by Verizon (VZ) with its market cap of ~$200.4 billion as of May 18.

Sprint’s (S) market cap was $20.6 billion, while Charter’s (CHTR) market cap was $64.9 billion on the same date.

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Valuation metrics for T-Mobile

Valuation metrics consist of price-based multiples and earnings-based multiples. On May 14, T-Mobile had a trailing EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 7.17x. AT&T, Verizon, and Sprint had EV-to-EBITDA multiples of 6.38x, 6.91x, and 4.88x, respectively.

T-Mobile expects to have EV-to-EBITDA multiples of 6.61x and 6.12x for this year and next year, respectively.

The company is now trading at a PE (price-to-earnings multiple) of 24.50x. T-Mobile expects to trade at PEs of 17.19x and 14.11x this year and next year, respectively. 

Returns

T-Mobile has fallen ~13.9% in the trailing-12-month period. However, peers AT&T and Sprint have fallen ~16.4% and 35.4%, respectively, while Verizon has generated a positive return of ~5.8% in the trailing-12-month period. T-Mobile has fallen ~8.9% in the trailing-one-month period and ~0.14% in the trailing-five-day period.

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