Will Higher Revenues Benefit T-Mobile (TMUS) Q3 Earnings? – October 25, 2022
T-Mobile US, Inc. (TMUS – Free report) is expected to release third quarter 2022 results on October 27 after the closing bell. In the last reported quarter, the company achieved an excellent profit surprise of 248.8%. It carried out a surprise on profits for the last four quarters of 219.3% on average.
The Bellevue, WA-based wireless service provider is expected to have posted higher revenue year-over-year, driven by strong performance across its wireless business.
Factors at play
In the third quarter, T-Mobile increased its 5G footprint in the country by introducing 5G home internet services in states including Colorado, Iowa, Kansas, Missouri, Oklahoma, Maryland, Connecticut, Massachusetts, New Jersey, New York and Pennsylvania. The company has more than 1.5 million residential Internet customers, positioning itself as the fastest growing broadband provider for the third consecutive quarter. With the expansion, more than 40 million homes are eligible for 5G home internet.
Home Internet service provides fast and affordable home broadband connectivity through a 5G gateway device and is accessible by all devices in the home. It has no data caps or charges equipment fees for the Gateway device and is priced at a flat rate of $50 per month with AutoPay. Customers can even take advantage of the service for $30 a month with Magenta MAX, T-Mobile’s most popular phone plan. It also requires no annual service contract and has no early termination fees for interrupting service.
In Q3 2022, the company, in association with Meta Platforms, Inc., offered Canva Pro free to all eligible small business customers. It also rolled out $200 in free advertising to attract customers. T-Mobile launched new Magenta for Business plans, as well as Microsoft 365, at no additional cost on up to two lines per account. New or existing Magenta for Business, Business Unlimited Ultimate+ and Business Unlimited Advanced customers with three or more lines will receive greater value from their business plans including Scam Shield Premium, Microsoft 365, Hotspot Data mobile, six months of Canva Pro, and $200 in Facebook or Instagram ad credits. These lucrative phone plans likely generated significant revenue during the quarter.
During the quarter, T-Mobile collaborated with SpaceX to bring Coverage Above and Beyond, which is a dramatic new plan designed to bring cellphone connectivity everywhere. T-Mobile, through its best wireless networks, strives to provide absolute coverage in all locations in the United States, including remote locations where traditional cellular signals do not work. This should be reflected in future results.
For the September quarter, Zacks’ consensus estimate for total revenue is set at $20,076 million, indicating growth from the reported figure of $19,600 million a year ago. The consensus estimate for adjusted earnings per share is 54 cents, suggesting a slight decline from the 55 cents reported a year earlier.
Earnings Whispers
Our tried-and-tested model predicts no earnings beat for T-Mobile this time around. The combination of a positive ESP Earnings and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating gains. That’s not the case here.
ESP Earnings: The earnings PSE, which is the difference between the most accurate estimate and the Zacks consensus estimate, is -3.95%, with the former pegged at 58 cents and the latter at 60 cents. You can discover the best stocks to buy or sell before they’re flagged with our Income ESP Filter.
Zack’s Ranking: T-Mobile currently has a No. 2 Zacks rank.
Actions to consider
Here are a few companies you might want to consider, as our model shows they have the right combination of elements to perform better this season:
Arista Networks, Inc. (A NET – Free Report) is expected to release quarterly numbers on October 31. It has a +1.27% Earnings ESP and a #3 Zacks Rank. You can see the full list of today’s Zacks #1 Rank stocks here.
The ESP on earnings for NETGEAR, Inc. (NTGR – Free Report) is +8.00% and it carries a Zacks ranking of 3. The company is expected to release quarterly numbers on October 26.
The ESP on earnings for Apple Inc. (AAPL – Free Report) is +0.89% and it carries a Zacks ranking of 3. The company is expected to release quarterly numbers on October 27.
Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.
