T-Mobile US Inc: Why TMUS Stock Is Red-Hot Today

t-mobile-stockT-Mobile Stock Lifted by Strong Quarterly Profits

T-Mobile US Inc (NASDAQ: TMUS) stock is up about eight percent and hovering around its 52-week high of $50.41.  The company has just delivered upbeat numbers for the quarter and expects to add a substantial number of customers in the year.

T-Mobile stock earned $0.27 per share on an adjusted basis, which was ahead of analysts’ estimates. Total revenue rose 17.8% to $9.2 billion, which makes the company an industry leader in growth for the thirteenth time in the past 14 quarters. The company’s net income rose to $366.0 million in the third quarter from $138.0 million a year earlier. (Source: “T-Mobile Delivers Strong Customer Growth AND Financial Results,” T-Mobile US Inc, October 24, 2016.)

In the third quarter of 2016, T-Mobile added 2.0 million total net customers. The company raised its customer outlook for 2016 and said that it now expects to add 3.7 million to 3.9 million branded postpaid customers on a net basis this year, compared with its previous forecast of 3.4 million to 3.8 million.

T-Mobile President and CEO John Legere said, “T-Mobile continues to take market share and attract customers from the competition with a differentiated brand and incredible network experience. This was the fourteenth consecutive quarter in which the Company has generated more than 1 million net customer additions.” (Source: Ibid.)

This market lead is good news for T-Mobile stock.

T-Mobile reported a quarterly profit that was better than expected by Wall Street. TMUS stock delivered adjusted earnings of $0.27 a share, better than the average $0.21 a share. A year-over-year increase in third-quarter earnings resulted primarily from higher service and equipment revenues, due to growth in the company’s customer base and gains in spectrum, which were partially offset by higher operating and non-operating expenses.

The company said that it saw continued growth in branded postpaid customers, primarily due to the introduction of the T-Mobile “ONE” plans, the launch of the Apple Inc. (NASDAQ:AAPL) “iPhone 7” in the quarter, and an increase in branded prepaid customer migrations to postpaid plans.  

T-Mobile competitor AT&T Inc. (NYSE:T) has recently announced its decision to buy Time Warner Inc (NYSE:TWX) for $85.0 billion. Legere hinted at his plans of providing video over mobile devices through partnerships with content players. He expects his company to be a bigger wireless operator than AT&T in five years. (Source: “T-Mobile US: Bigger Than AT&T in Wireless in Five Years, Says CEO Legere,” Barrons, October 24, 2016.)

Citigroup Inc’s (NYSE:C) Michael Rollins reaffirmed his “buy” rating and a $55.00 price target for TMUS stock. If the company continues to deliver the same way in the future, T-Mobile stock is likely to extend its gains.

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