T-Mobile US, Inc. TMUS is set to report second-quarter 2024 results on Jul 31, before the opening bell. In the trailing four quarters, the company delivered an earnings surprise of 2.49%.
The wireless service provider is expected to witness revenue growth year over year, driven by growing demand for its advanced 5G network solutions. The company is taking several measures to strengthen network resiliency and boost the reliability of its services. This has enabled the uncarrier to improve customer satisfaction and enhance brand reputation, traits which are essential to bolster competitive edge in a highly saturated U.S. wireless market. However, soft demand for prepaid services is a headwind.
Factors at Play
During the quarter, T-Mobile entered into a long-term agreement with the U.S. Department of the Navy as part of the Spiral 4 contract, which is valued at $2.67 billion. Per the deal, agencies under the Department of Defense will gain access to T-Mobile wireless services and equipment for various use cases.
In the quarter under review, TMUS introduced enticing 5G-powered innovations to enhance viewers' experience at the KPMG Women’s PGA championship. The company also collaborated with SailGP to bring cutting-edge 5G-powered solutions to the New York Sail Grand Prix. These developments are likely to have supported the top line in the second quarter.
T-Mobile also undertook a series of initiatives to enhance its network infrastructure and prepare its team and resources for swift disaster management. The uncarrier has expanded its network of emergency response assets to bolster its service reliability during emergency situations. TMUS has also joined forces with Dopl Technologies to enhance healthcare accessibility in rural areas using 5G technology.
The uncarrier rolled out two new Internet plans to address the evolving customer’s requirements. The Home Internet Plus, an all-in-one plan with comprehensive WiFi coverage and 24/7 tech support for any connected devices at Home. The other plan called ‘Away,’ delivers a flexible WiFi solution for travelers to stay connected nationwide. These initiatives are likely to have a favorable impact on the upcoming results.
Key Developments in Q2
In the to-be-reported quarter, T-Mobile has inked a definitive agreement with United States Cellular Corporation to acquire substantially all of the latter’s wireless operations along with 30% of its spectrum assets across several spectrum bands. T-Mobile will pay an aggregate of $4.4 billion, including a combination of cash and up to approximately $2 billion of assumed debt.
The transaction is likely to close midway 2025, subject to the fulfillment of mandatory closing conditions and other regulatory approvals. The transaction is likely to facilitate a competitive market with increased options and enable TMUS to expand its fast-growing home broadband offerings and fixed wireless products by tapping into the additional capacity and coverage created through the combined spectrum and wireless assets.
Overall Expectations
Our estimate for total service revenues is pegged at $16.48 billion, suggesting 4.7% year-over-year growth. Our estimate for equipment revenues is pegged at $2.8 billion, indicating a 12% decrease year over year. Branded postpaid ARPU is likely to witness an improvement year over year.
For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $19.51 billion, which indicates an improvement from the year-ago quarter’s reported figure of $19.20 billion. The consensus estimate for adjusted earnings per share stands at $2.27, up from $1.86 reported a year ago.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for T-Mobile this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.14%. The Most Accurate Estimate is pegged at $2.26, while the Zacks Consensus Estimate stands at $2.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. price-eps-surprise | T-Mobile US, Inc. Quote
Zacks Rank: T-Mobile currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Pinterest PINS is set to release quarterly numbers on Jul 30. It has an Earnings ESP of +7.14% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +4.89%, and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Aug 1.
The Earnings ESP for Arista Networks, Inc. ANET is +1.72%, and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Jul 30.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
