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T-Mobile’s Q1 Earnings Report Could Boost Its Stock


Sep. 4 2020, Updated 6:57 a.m. ET

T-Mobile (NYSE:TMUS) stock rose 3.2% on Monday and closed at $88.96 with a market cap of $109.8 billion. The stock was trading 12.2% below its 52-week high of $101.35. Meanwhile, the stock was trading 40.1% above its 52-week low of $63.50.

On Monday, the S&P 500 and the Dow Jones indices rose 0.4% and 0.1%, respectively. AT&T (NYSE:T) fell 1.0%, respectively, on the same day.

What can investors expect from T-Mobile’s first-quarter earnings results? The company will likely report its results on Wednesday, for the quarter ended March 31, after the market close.

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What to expect from T-Mobile’s Q1 earnings

For the first quarter, analysts expect T-Mobile to report revenue of $11.38 billion, which represents 2.7% growth from $11.08 billion in the first quarter of 2019. The company’s top line could grow due to a surge in its wireless subscriber base. Analysts also expect T-Mobile to report a non-GAAP EPS of $1.02 in the first quarter—a fall of 4.0% from $1.06 in the first quarter of 2019.

Last week, T-Mobile reported that Sprint lost 348,000 postpaid phone net subscribers in the March ended quarter compared to net losses of 189,000 a year ago. Sprint also lost 10,000 prepaid net customers. In the March ended quarter, the company’s postpaid phone churn rate was 1.89% compared to 1.82% in the same quarter of 2019. As of March 31, Sprint had about 54.7 million wireless connections compared to 54.5 million a year ago. On a standalone basis, Sprint’s financial results, for the quarter that ended in March, will likely be released later this month.

According to a FierceWireless report, “T-Mobile and Sprint completed their merger on April 1. T-Mobile said the standalone Sprint results were calculated using Sprint’s pre-merger reporting policies, and it plans to release Sprint’s stand-alone final financial results later in May once an audit is completed.” The report also said, “It noted that the customer results presented here will end up being materially lower once T-Mobile reporting policies are applied and Sprint prepaid brands are divested. Analysts didn’t seem too concerned about Sprint’s weak numbers for its final quarter.”

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T-Mobile and Sprint merger deal

Last month, T-Mobile completed its acquisition of Sprint. The merger deal between T-Mobile and Sprint closed after nearly two years. In April 2018, T-Mobile and Sprint made their merger plans public. The merger deal faced a lawsuit filed by several state attorneys general on antitrust concerns. The states argued that the tie-up was anticompetitive and would likely increase wireless prices for consumers. However, U.S. Federal Judge Victor Marrero allowed T-Mobile to acquire Sprint. In 2019, the Federal Communications Commission and the Department of Justice approved the merger on the condition that the new T-Mobile would divest certain wireless assets to Dish Network (NASDAQ:DISH). Dish Network will likely acquire Sprint’s prepaid assets and part of its spectrum for $5 billion. T-Mobile also agreed to provide a 5G network across the US.

Read T-Mobile and Sprint Merger Gets Green Light in California and T-Mobile Stock Gains after Closing Sprint Merger Deal to learn more.

Analysts’ recommendations

As of Monday, analysts have a consensus mean target price of $101.05 on T-Mobile stock. The target price represents a 12-month return potential of 14% based on the closing price of $88.96 on Monday. Overall, 26 analysts follow T-Mobile as of Monday. Among the analysts, 22 recommend a “buy,” while four recommend a “hold.” None of the analysts recommend a “sell.”

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Stock performance

Based on the closing price on Monday, T-Mobile stock was trading 0.5% above its 20-day moving average of $88.53. The stock is also trading 3.3% above its 50-day moving average of $86.11 and 5.7% above its 100-day moving average of $84.15.

T-Mobile’s 14-day relative strength index is 53. The number indicates that the stock isn’t overbought or oversold. T-Mobile has an upper Bollinger Band level of $92.08. The company’s middle Bollinger Band level is $88.53, while its lower Bollinger Band level is $84.97. On Monday, T-Mobile stock closed near its middle Bollinger Band level, which indicates that the stock isn’t overbought or oversold.

In the first quarter, AT&T reported revenues of $42.8 billion, which implies a fall of 4.6% YoY. Also, the company posted an adjusted EPS of $0.84 in the first quarter, which implies a fall of 2.3% YoY. In the first quarter, AT&T added 163,000 postpaid phone net subscribers. AT&T reported a postpaid phone churn rate of 0.86% in the first quarter, which fell from 0.92% in the first quarter of 2019. Read Is It Time for Investors to Exit AT&T Stock? to learn more.

Stay tuned to learn how T-Mobile performed in the first quarter.


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