T-Mobile (TMUS), the nation’s third-largest wireless carrier, is set to report second quarter fiscal 2017 earnings results after the closing bell Wednesday. TMUS stock hit a all-time high of $68.88 in May following the company’s sixth consecutive earnings beat.
Led by boastful CEO John Legere, the Bellevue, WA.-based wireless company continues to grow market share by finding creative ways to lure subscribers away from larger rivals Verizon (VZ) and AT&T (T). Combined with rising cash flows, profit margins and an improved network, analysts have begun speculate whether T-Mobile have built itself into an acquisition target. Meanwhile, there’s also the long-rumored merger with Sprint (S) keeping things interesting.
That said, the highly competitive wireless market is now showing increased sings of saturation. To what extent can Wednesday’s earnings report — in particular T-Mobile’s ability to attract and retain customers — prolong what has been a compelling growth story. The company has amassed 72.5 million total customers as of March 31, marking an almost 11% year-over-year rise. Even with the strong user gain, including a 29% surge in branded postpaid mobile broadband customers, the management still raised its 2017 full-year outlook. Can it answer the call?
In the three months that ended June, Wall Street expect the company to report 39 cents per share on revenue of $9.81 billion. This compares to the year-ago quarter when the company earned 25 cents per share on $9.22 billion in revenue, translating to year-over-year growth of 56% and 6.4%, respectively. For the full year, ending in December, earnings are projected to rise 22% year over year to $2.07 per share, while revenue of $40.35 would rise 8.3% year over year.
TMUS stock tends to move wildly on either a beat or a miss. But with the stock up just 6% year to date, and down 5% in three months, versus the S&P 500’s 9% year-to-date rise, expectations for this quarter are not as high as previous quarters. What’s more, the fact that TMUS stock is priced 14% below its consensus price $71 could be appealing for investors who are willing to hold for 12 to 18 months.
Wall Street has begun to appreciate the company’s ability to operate on its stated objectives of delivering to consumers the most cost-effective nationwide 4G LTE wireless network access without sacrificing quality or value. Following the strong first quarter beat, several boosted price targets, including Oppenheimer, which raised its to $75 from $70, implying a premium of 23% from current levels. And given T-Mobile’s subscriber growth momentum, combined with investments in 5G LTE, hanging up on TMUS stock now would be a mistake.
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Source : http://www.nasdaq.com/article/tmobile-tmus-2nd-quarter-earnings-what-to-expect-cm817877