Why T-Mobile (TMUS) Could Beat Earnings Estimates Again
If you’re looking for a stock that has a solid history of beating earnings estimates and is in a good position to hold the trend in its next quarterly report, you should consider T-Mobile (TMUS). This company, part of the Zacks Wireless National industry, shows potential for another beat in earnings.
This wireless carrier has an established record of better earnings estimates, especially when looking at the previous two reports. The company claims an average surprise for the past two quarters of 143.90%.
For the last quarter reported, T-Mobile earned $1.43 per share versus Zacks’ consensus estimate of $0.41 per share, which is a surprise of 248.78%. For the prior quarter, the company was expected to post earnings of $0.41 per share and it actually produced earnings of $0.57 per share, delivering a surprise 39.02%.
Price and Surprise EPS
With that earnings history in mind, recent estimates have risen for T-Mobile. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of a revenue beat, especially when you combine that metric with its nice Zacks Rank.
Our research shows that stocks with the combination of a positive earnings ESP and a Zacks rank of #3 (Hold) or better produce a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that exceeded the consensus estimate could be as high as seven.
The Zacks Earnings ESP compares the most accurate estimate to the Zacks consensus estimate for the quarter; the most accurate estimate is a version of the Zacks Consensus whose definition is tied to change. The idea here is that analysts revising their estimates just before the earnings release have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.
T-Mobile currently has an earnings ESP of +8.18%, suggesting that analysts have recently become optimistic about the company’s earnings outlook. This positive ESP on earnings, when combined with the Zacks rank #2 (buy) of the stock, indicates that another beat may be around the corner.
When the ESP of earnings turns negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock’s loss of profit.
Many companies end up beating the consensus EPS estimate, but that may not be the only basis for their stock rally. On the other hand, some stocks may hold firm even if they end up missing the consensus estimate.
For this reason, it is really important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Be sure to use our earnings ESP filter to discover the best stocks to buy or sell before they are released.
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TMobile US, Inc. (TMUS): Free Stock Analysis Report
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