T-Mobile, US, Inc. TMUS is set to report fourth-quarter 2024 results on Jan. 29, before the opening bell. In the trailing four quarters, the company delivered an earnings surprise of 4.25%, while in the last reported quarter, it delivered an earnings surprise of 10.13%.

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The wireless service provider is expected to have witnessed a top-line expansion year over year, backed by growing demand for its postpaid services. T-Mobile’s strategy to challenge conventional Internet service provider practices by swiftly addressing user pain points underscores its customer-first approach. However, stiff competition and premium valuation are concerns.

Factors at Play Ahead of TMUS’ Q4 Earnings Release

During the quarter, T-Mobile launched three innovative 5G Internet plans, tailored to match the unique requirements of home Internet and small business Internet customers. These plans come with a price lock, giving consumers an assurance that there will be no sudden increase in the monthly rate for Internet services. Zero equipment charges, unlimited data, no annual contracts and transparent pricing are major advantages for end users.

TMUS also introduced a cutting-edge portable 5G private network and services solution, called 5G On Demand. The product simplifies the process of establishing 5G connectivity virtually in any location within a short time and efficiently supports high bandwidth-intensive applications. TMUS’ 5G On Demand has already gained significant traction, owing to its leading-edge capabilities. 

High-profile events like the KPMG Women’s PGA Championship with NBC Sports and the PGA Championship with CBS Sports have leveraged the product to deliver seamless video transmission, enhance operations and elevate fan experience. These product launches are expected to have driven revenue growth in the fourth quarter.
 
In the quarter under review, Rice Rivers Center, Virginia Commonwealth University has opted to utilize T-Mobile’s industry-leading 5G portfolio to support conservation efforts of endangered Atlantic sturgeon. TMUS also elevated fan experience at the Las Vegas Grand Prix with its 5G network. These developments are likely to have a favorable impact on the upcoming results.

However, intensifying competition in the U.S. wireless market is weighing on TMUS’ margin. From a valuation standpoint, T-Mobile appears to be trading at a premium relative to the industry, and investors could be better off if they trade with caution.

Key Developments in TMUS’ Q4

TMUS announced that it has opened registration for a beta program offering direct-to-cell satellite service in collaboration with Starlink. The beta program is available for all of T-Mobile’s postpaid voice customers with a compatible device. Initially, it will support text messaging only with voice and data services expected to be introduced in the future.

Overall Expectations From TMUS

Our estimate for total service revenues is pegged at $16.75 billion, implying 4.4% year-over-year growth. The estimate for equipment revenues is pegged at $4.05 billion, indicating a 2.8% decrease year over year. Branded postpaid ARPU is likely to have remained flat year over year.

For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $21.17 billion, which indicates an improvement from the year-ago quarter’s reported figure of $20.48 billion. The consensus estimate for adjusted earnings per share is pegged at $2.17, up from $1.67 reported a year ago.

Earnings Whispers for TMUS

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.

TMUS’ Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.17. 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

TMUS’ Zacks Rank: T-Mobile currently has a Zacks Rank #5 (Strong Sell).

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:

PayPal Holdings, Inc. PYPL is scheduled to report quarterly numbers on Feb. 2. The Earnings ESP for the company is +1.36% and it carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Qualcomm Technologies, Inc. QCOM is +3.34% and it carries a Zacks Rank of 2 at present. The company is scheduled to report its quarterly numbers on Feb. 5.

The Earnings ESP for InterDigital IDCC is +3.21% and it sports a Zacks Rank of 1 at present. The company is scheduled to report its quarterly numbers on Feb. 6.

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