Wall Street says Verizon and AT&T are better investments than T-Mobile
T-Mobile is due to release its fourth-quarter earnings report on January 29th. If you're a long-time PhoneArena reader, you know that T-Mobile usually reports industry-leading numbers each quarter. Additionally, the company continues to grow its revenue and earnings just about every three months. This growth has been reflected in the carrier's stock which is up close to 30% over the last year.
Wall Street analysts cited by NASDAQ expect T-Mobile to report a fourth-quarter profit of $2.17 per share. That would be a 30% year-over-year increase from the $1.67 that T-Mobile reported for the fourth quarter of 2023. During three of the last four quarterly reports, T-Mobile's bottom line exceeded Wall Street estimates. In October, for example, T-Mobile reported that its third-quarter profits exceeded Wall Street estimates by 10.1%.
The analysts also expect T-Mobile to report full-year earnings of $9.31 per share for 2024. If the carrier meets that estimate, it will have increased its bottom line by 34.3% from the $6.93 per share it made in 2023.
T-Mobile's shares have been falling for nearly a month ever since CEO Mike Sievert made a bearish-sounding comment during the the UBS Global Media and Communications Conference held in early December. The executive, talking about the recently ended 2024 fourth quarter said, "So while I'm here to tell you, it's going great, we're confident in our guidance, investors should be cautious because there's a lot of risk in the back half [of the fourth quarter]."
T-Mobile "should continue to outpace its competitors from a subscriber and financial growth perspective in the years ahead, [but] its pace of growth is decelerating as the business matures, and it moves further past the Sprint integration synergies."-Wells Fargo
Stockholders and Wall Street analysts immediately took this to mean that T-Mobile would not meet fourth-quarter estimates. The stock, which had recently set a new 52-week high of $248.16, plunged $14.92 or 6.12% to close at $228.86. The shares have continued to fall even though Andre Almeida, a member of the company's board of directors, spent close to $900,000 to purchase 3,807 shares at an average cost of $235.72. Even after announcing a $14 billion share buyback, T-Mobile's shares have continued to fall losing 14.4% after making an all-time high at $248.15.
Today two Wall Street firms, Wells Fargo and RBC Capital, downgraded T-Mobile's shares to hold from buy. As a result, the stock plunged another $6.73 or 3.07% to close at $212.38. This decline occurred despite a 1.2% gain for the NASDAQ index. One analyst at Wells Fargo said that at the current stock price, T-Mobile's industry-leading earnings growth is already baked into the price of the stock which he says makes industry laggards Verizon and AT&T look more attractive as investments.
Sitting on an estimated $93 million of T-Mobile shares, it's no wonder CEO Mike Sievert is smiling. | Image credit-T-Mobile
Over the last five years, Verizon's shares have dropped 33% while the value of AT&T's stock has plunged 22.4%. Over that same time period, T-Mobile's stock has risen 169%.
Several T-Mobile critics say that the carrier's executives like Sievert are more focused on the company's stock price than on the company's customers. As of mid-August, Sievert reportedly owned 438,124 T-Mobile shares which have a current value of $93 million. Despite the recent drop in the stock, the value of the CEO's holdings has risen by $8 million since mid-August.
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