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Opinions Stockchase Insights
T-Mobile USTMUSBUYSep 11, 2023
Stockchase InsightsStock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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Premium contentAccording to Stockchaser Michael O'Reilly, TMUS checks off several boxes: has 113 million customers, is the only American standalone 5G mobile network, and has a deal with Amazon AWS (the #1 cloud service) to provide 5G to their customers. Also consider that TMUS took a leap forward on April 1, 2020 when it officially absorbed Sprint to add their 33.84 postpaid subscribers to T-Mobile's existing 47 million subs.
Premium contentWe reiterate TMUS, the second largest wireless operator in the US with over 113 million customers operating the country's sole stand-alone 5G network, as a TOP PICK. They just announced a deal with Amazon AWS to provide 5G services to customers. It trades at 2.6x book. It has been prudently using some cash reserves to retire debt and buy back shares. We recommend keeping the stop at $135, looking to achieve $180 -- upside potential over 20%. Yield 0%
(Analysts’ price target is $180.17)Premium content
They used to be marginal players in the wireless industry. Then, bold management, a customer-friendly ethos, great branding and the Spring merger, TMUS has become a heavy hitter. Since end-2019, TMUS has gained 83% while Verizon lost 7% and AT&T fell 25%. The difference is execution. All the carriers are rushing to build their 5G networks while T-Mobil already leads in 5G build. TMUS boasted 1.4 million net subscription additions in Q1 when the street expected under 1 million.
An essential 5G play The CEO has made this best in class. The Sprint merger put them on near-equal footing with ATT and Verizon. The new CEO has laid the groundwork for 5G to give TMUS the most widely available 5G network, though Verizon is the fastest. TMUS' 5G range now covers 280 million people. This week they announced huge deals with Nokia and Ericsson to expand that network. It's pulled back from highs for no reason.
TMUS is reasonably priced at 19X earnings. Growth looks good; EPS has gone from 99c in 2015 to an expected $10.02 next year. 2024 growth vs 2023 is expected at more than 40%. 2025 growth will not be that high but should still be quite decent. Debt is fairly high but cash flow is secure and growing. Certainly we would prefer it over the larger, slow growth incumbents in the sector. There is no dividend, however, as it focuses on growth. But we would be comfortable owning it.
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