What’s up with T-Mobile Stock?
T-Mobile stock has had a bumper year so far, rising 16% year-to-date, versus the broader S&P which remains down about 20% over the same period. While mobile carrier stocks, in general, have outperformed this year as investors seek stability from the sector’s steady cash flows and lower valuations as the US enters a more strict, T-Mobile shares have fared much better than rivals such as Verizon (down 3% year-to-date) and AT&T
Now, although T-Mobile shares look expensive relative to their peers, trading at around 48 times consensus 2022 earnings, markets are forecasting a huge boost in earnings and cash flow from 2023. earnings in recent quarters have been impacted by costs related to the integration of Sprint
Overall, the growing subscriber base and cost savings are likely to significantly help T-Mobile’s cash flow in years to come. The company previously guided free cash flow between $13 billion and $14 billion in 2023, compared to levels of around $6 billion in 2021, with the company noting that this number could reach $18 billion in 2026. Rising cash flow should help fund major stock buybacks in coming years, which could also support T-Mobile’s share price.
We value T-Mobile at around $164 per share, about 23% ahead of the current market price. See our analysis on T-Mobile valuation: Expensive or cheap for more details on what drives our price estimate for the company. Also discover our analysis of T-Mobile revenue for more details on the company’s main business segments and likely revenue trends.
Stock prices have fallen precipitously across all sectors over the past few months and we are now in a bear market for the first time since March 2020, when the Covid-19 outbreak triggered a stock market crash. We capture key Dow Jones trends during and after major stock market crashes in our interactive dashboard analysis,’Comparison of stock market crashes.’
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