T-Mobile US Inc
(NASDAQ:TMUS) CEO Mike Sievert sees shares as
undervalued, expecting the price to climb above $150 eventually.
With expectations for $16 billion to $18 billion in
free cash flow in 2024, T-Mobile's currently valued at just a 10x multiple.
While that might be higher than its competition, there are a few reasons it
deserves a higher multiple. Namely, it's growing faster and taking market share
and it's not as debt-laden as its competition.
TMUS is buying back shares hand over fist. It recently
announced a new share buyback program for about $15.25 billion over the next
five quarters on top of its initial $14 billion buyback announced in September
Sievert discussed the potential for dilution from the
Softbank agreement at a recent investor conference. "It's of course
overwhelmed by our purchases in the markets," he said. "In fact,
we've purchased more in the last ... few months than the whole potential
dilution event in the first place."
T-Mobile has consistently produced strong operating
results. It leads the industry in net subscriber additions, and it doesn't rely
as heavily on promotions to get those sign-ups. That's allowed it to keep its pricing
flat while its competitors raise prices, which should only accelerate its
Management raised its guidance for core
adjusted EBITDA to $28.9 billion to $29.2 billion alongside its second-quarter
earnings report. EBITDA margin is expanding as well, up 3 percentage points
through the first six months of the year.
Why the TMUS Weekly
Options Trade was Originally Executed!
US Inc (NASDAQ:TMUS) stock climbed 4% on Thursday afternoon following a dividend
announced it will issue its first-ever dividend to shareholders.
Yesterday at the Goldman Sachs Communacopia & Technology Conference,
T-Mobile CEO Mike Sievert appeared, and announced the change in capital
"We’re outperforming this whole sector on growth, and our capital
priorities have not changed," Sievert said at the Goldman Sachs
Communacopia and Tech Conference in San Francisco. "It is to fund this
historically great business plan, both organic and inorganic, core business as
well as adjacencies."
T-Mobile is just winding up its prior $14 billion share-repurchase
program announced last September. So Sievert announced the company's new $19
billion capital return program that will go through 2024. However, this time,
of that $19 billion, $3.75 billion is earmarked for a new dividend in addition
to the share repurchases. That upcoming dividend payment would amount to about
to about a $0.63 quarterly dividend, or $2.52 annualized, which would equate to
a 1.82% dividend yield at today's stock price. In addition, Sievert said the
company plans to raise that payout by about 10% annually.
2021, we laid out an aspiration that was big and bold that we saw up to $60
billion in shareholder returns during our planning horizon," Sievert
added. "This is the second installment: $19 billion over the next five
quarters and, as part of that, our first-ever dividend — a $3 billion annual
dividend. That’s $3.75 billion over the next five quarters that we see
increasing at about 10% a year."
The TMUS Weekly
Options Trade Explained.....
** OPTION TRADE: Buy TMUS OCT 06 2023 140.000 CALLS - price at last close was $2.92 - adjust accordingly.
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken.
Entered the TMUS Weekly Options (CALL) Trade on Friday, September
Sold the TMUS weekly options contracts on Friday, September 15, 2023 for $5.40; a potential profit of 181%.
Don’t miss out on further trades – become a
Further Catalysts for the TMUS Weekly Options Trade…..
In the second quarter, T-Mobile's
postpaid net additions came in better than expected and fewer subscribers left
the network, though overall sales dropped 2% year over year to $19.2 billion.
Sievert stated that investors can
continue to expect industry-leading earnings growth and cash flow generation.
"What investors expect from us
is ongoing, reliable growth, profitable growth that translates into
industry-leading cash flow growth — and that's what we deliver," Sievert said.
"We’ve been delivering it consistently over time, such that we believe
it’s time to make the next installment of our longstanding aspirations around
demonstrated strong financial performance in recent years. The company recently
reported annual revenue representing a slight decline compared to the previous
year. Despite the decrease in revenue, T-Mobile reduced its operating expenses.
The company's net income has experienced a slight decline recently as
operates in the highly competitive radiotelephone communication industry. The
telecommunications sector is characterized by rapid technological advancements,
evolving consumer preferences, and intense competition among major players.
T-Mobile faces competition from other wireless carriers, such as Verizon and
AT&T, as well as smaller regional and prepaid wireless providers.
strategically positioned itself as a challenger brand, emphasizing its
commitment to customer satisfaction, affordable pricing, and innovative
services. The company's Un-carrier initiatives have disrupted traditional
industry practices, attracting customers and differentiating itself from
competitors. T-Mobile's nationwide network coverage and focus on expanding its
5G capabilities contribute to its competitive advantage in the market.
several growth opportunities on the horizon. The company continues to invest in
expanding its network infrastructure, particularly in rural areas, to enhance
coverage and improve service quality. Additionally, T-Mobile is well-positioned
to capitalize on the increasing demand for 5G connectivity, offering faster
speeds and unlocking new possibilities for customers and businesses.
also pursued strategic acquisitions to fuel its growth. For instance, the
company completed its merger with Sprint Corporation, further strengthening its
market position and enabling synergies in network expansion and cost savings.
Moreover, T-Mobile has the potential to explore new business segments, such as
Internet of Things (IoT) solutions and enterprise services, to diversify its
faces certain risks and challenges in the dynamic telecommunications industry.
The evolving nature of consumer preferences and technological advancements pose
risks in terms of maintaining a competitive edge and adapting to changing
market dynamics. Regulatory changes and compliance requirements can also impact
the company's operations and profitability.
T-Mobile operates in a capital-intensive industry, requiring substantial
investments in network infrastructure and spectrum licenses. This reliance on
capital expenditures can strain the company's financial resources and cash flow
generation. T-Mobile must carefully manage its debt levels and effectively
allocate resources to sustain its growth trajectory.
"T-Mobile remains our favorite
stock across our coverage as we see substantial synergy and operating
efficiencies driving strong EBITDA and cash flow growth, as well as substantial
capital return," JPMorgan's Philip Cusick wrote in July.
In a report released yesterday, John Hodulik from UBS maintained a Buy
rating on T-Mobile US, with a price target of $180.00.
According to the issued ratings of 14 analysts in the last
year, the consensus rating for T-Mobile US stock is Buy based on the current 1
hold rating, 12 buy ratings and 1 strong buy rating for TMUS. The average
twelve-month price prediction for T-Mobile US is $182.55 with a high price
target of $210.00 and a low price target of $160.00.
T-Mobile has greatly outperformed rivals
Verizon Communications and AT&T over the long term, even when their higher
dividends are factored in. So dividend-focused mutual and index funds are
likely champing at the bit to be able to own T-Mobile as well, or as a substite
for the others.
T-Mobile US Stock opened at $137.28 on Friday. The company has a fifty
day moving average price of $137.88 and a 200-day moving average price of
$140.11. The firm has a market capitalization of $161.50 billion, a P/E ratio
of 27.35 and a beta of 0.55. The company has a debt-to-equity ratio of 1.14, a
current ratio of 0.82 and a quick ratio of 0.77. T-Mobile US has a one year low
of $124.92 and a one year high of $154.38.