Currently, T-Mobile (TMUS) stock is trading at 19.75x analysts’ fiscal 2019 EPS estimate of $4.01, and 16.50x their fiscal 2020 estimate of $4.80. Analysts expect the company’s adjusted EPS to rise 19.3% in fiscal 2019 and 19.7% in fiscal 2020.

T-Mobile stock looks expensive considering its expected earnings growth for this year. However, the stock appears cheap based on its expected earnings growth of 19.7% and its PE ratio of 16.50x for 2020.

T-Mobile’s expected five-year PE-to-growth ratio is 1.05x. A ratio higher than one suggests a stock is overvalued.

Analysts’ recommendations

Of the 21 analysts tracking T-Mobile, most (81%) suggest “buy,” and 19% suggest “hold.” Their mean target price of $88.53 implies an 11.9% upside over the next year.

T-Mobile stock’s technicals

T-Mobile stock fell 0.03% yesterday and closed at $79.13. The stock’s five-day, one-month, and year-to-date price movements were 1.4%, 2.1%, and 24.4%, respectively. The stock is trading 7.15% below the 52-week high of $85.22 it saw on July 26, and 31.97% above the 52-week low of $59.96 it saw on December 26, 2018. T-Mobile stock has risen 22.89% in the last year.

At yesterday’s closing price, T-Mobile stock was trading 1.8% above its 20-day moving average of $77.76, 1.4% above its 50-day moving average of $78, and 3.5% above its 100-day moving average of $76.48. The stock’s 14-day relative strength index score was 56.50, which implies investors are neutral toward the stock.

Revenue and earnings expansion

Last year, T-Mobile’s sales rose YoY (year-over-year) from $40.6 billion to $43.3 billion. Analysts expect its sales to increase by 4.6% YoY to $45.3 billion in 2019 and 4.8% YoY to $47.5 billion in 2020.

Additionally, the company’s adjusted EPS grew YoY from $2.71 to $3.36 last year. Analysts expect its adjusted EPS to rise 19.3% YoY to $4.01 this year and 19.7% YoY to $4.80 next year. They forecast its EPS growing 18.9% compounded annually over the next five years.

Merger with Sprint

On July 26, T-Mobile and Sprint (S) stocks hit 52-week highs after the US Justice Department approved the companies’ proposed merger. Since then, both stocks have been trading in a narrow range as the merger’s future isn’t clear. The merger is facing a lawsuit from several state attorneys general on antitrust concerns. To learn more about the deal, read T-Mobile and Sprint’s Merger: What’s an Investor to Do? and T-Mobile and Sprint Merger Could Lead to Job Losses.

Yesterday, Sprint stock rose 1.32% and closed at $6.91, while AT&T (T) stock rose 1.49% to $36.79. T-Mobile’s market capitalization is $67.6 billion, while AT&T’s and Sprint’s market caps are $268.8 billion and $28.3 billion, respectively.

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