Will T-Mobile’s Q3 Earnings Impress Investors?

T-Mobile (TMUS) plans to post its third-quarter earnings results on October 25. The third-largest wireless service provider had an action-packed September quarter.

On July 26, the US Department of Justice approved T-Mobile’s proposed $26.5 billion merger with Sprint (S). That day, T-Mobile and Sprint stocks rose to new 52-week highs of $85.22 and $8.06, respectively. However, amid merger uncertainties, the stocks have been range-bound since then. On Wednesday, Reuters reported the merger deal also won the Federal Communications Commission’s approval. The mega-merger’s next big day its court hearing on December 9 for a multistate lawsuit regarding antitrust issues. To learn more, read T-Mobile–Sprint Merger Uncertainty Remains.

What Wall Street says about T-Mobile

Analysts think T-Mobile could post impressive Q3 financial results. In the third quarter, analysts expect T-Mobile’s total revenue to rise 4.5% YoY (year-over-year) to $11.3 billion from $10.8 billion due to customer gains. They also expect the company’s sales to rise 4.6% YoY to $45.3 billion in 2019, 4.9% YoY to $47.6 billion in 2020, and 5.6% YoY to $50.2 billion in 2021.

In the third quarter, analysts expect T-Mobile’s non-core EPS to grow 2.2% YoY to $0.95. T-Mobile has exceeded Wall Street’s non-core EPS estimates in the last 14 quarters. In 2019, 2020, and 2021, analysts expect the company’s non-core EPS to rise 18.5% YoY to $3.98, 21.1% YoY to $4.82, and 16.4% YoY to $5.61, respectively.

T-Mobile’s second-quarter performance

In the second quarter, T-Mobile’s non-core EPS rose 18.5% YoY to $1.09, beating analysts’ estimate by 12.4%. Its adjusted net income grew significantly YoY, to $939 million from $782 million.

In the second quarter, T-Mobile’s revenue rose 3.9% YoY from $10.6 billion to $11.0 billion, missing analysts’ average estimate of $11.1 billion. The increase was primarily driven by the company’s service revenue growing 6.2% YoY to $8.4 billion from $7.9 billion.

In the June quarter, T-Mobile added 1.1 million net postpaid customers. It expects to add 3.5 million–4.0 million postpaid net customers in fiscal 2019.

Peers’ expectations

AT&T (T), the second-largest wireless service provider in the US, is set to report its third-quarter results on October 28. In the third quarter, analysts expect its adjusted EPS to rise 3.3% YoY to $0.93 and its revenue to fall 1.5% YoY to $45.1 billion.

Sprint is set to report its September quarter results on October 29. Analysts expect the company to post adjusted EPS of -$0.02, and for its revenue to fall 3.1% YoY to $8.2 billion.

Stock performance

This year, T-Mobile stock has outperformed major US indexes. While TMUS has gained 27.4%, the Dow Jones Industrial Average and S&P 500 have risen 15.9% and 19.6%, respectively. In comparison, Sprint and AT&T have gained 10.6% and 32.5%. Analysts’ average 12-month target of $88.17 for TMUS is higher than its current price of $81.05. To learn more, read T-Mobile–Sprint Merger: Time to Buy the Stocks? Stay tuned to find out how T-Mobile performed in the third quarter.