Nucor earnings beat by $0.08, revenue fell short of estimates
On Friday, Raymond (NSE:RYMD) James analyst Ric Prentiss maintained a "Market Perform" rating on T-Mobile US (NASDAQ:TMUS) stock, which is currently trading near its 52-week high of $276.49. The decision comes as the firm tweaks its financial estimates for the company ahead of its first-quarter 2025 results. According to InvestingPro data, two analysts have recently revised their earnings estimates downward for the upcoming period, suggesting potential headwinds ahead. Prentiss adjusted the Q1 C-EBITDA estimate down by 2.0%, from $8.203 billion to $8.037 billion, citing a larger equipment subsidy leading to a worse Loss on Equipment (LOE) than initially projected. Despite this, the full-year 2025 estimate saw only a minimal decrease, from $33.57 billion to $33.52 billion, as some C-EBITDA is expected to shift into the fourth quarter.
The revised estimates also take into account a reduction in Wholesale/Other revenues, particularly due to changes in revenue from Tracfone as it integrates with Verizon (NYSE:VZ) and DISH (NASDAQ:DISH) as it transitions capacity to AT&T (NYSE:T) and its own network. Additionally, higher interest expenses are anticipated following T-Mobile’s raising of over $6 billion in debt during the first quarter.
T-Mobile’s subscriber additions are expected to remain steady, as the company has not shown the same level of concern as Verizon regarding the competitive environment. The company’s strong market position is reflected in its impressive financial performance, with revenue reaching $81.4 billion in the last twelve months and a robust gross profit margin of 63.8%. InvestingPro analysis shows the company maintains a GOOD financial health score, with particularly strong marks in profitability and price momentum metrics. On March 20, T-Mobile announced it was finalizing the sale of 13.5 MHz of 800 MHz spectrum to Grain Management, a private spectrum investor. The deal involves an undisclosed amount of cash and the acquisition of all of Grain’s 600 MHz licenses, which are more compatible with T-Mobile’s network than the 800 MHz spectrum. This transaction follows DISH’s inability to finance the purchase of the spectrum, despite having a call option to buy it for $3.6 billion.
Further insights were shared during a recent lunch hosted by Raymond James with a prominent D.C. contact, discussing various topics including spectrum authority, BEAD funding, DISH’s network buildout requirements, and the M&A environment. The discussions reinforced the belief that the current administration is unlikely to present major regulatory obstacles for T-Mobile’s deal with USM, considering USM’s challenges as a regional wireless operator.
T-Mobile’s current valuation stands at 11.3x next twelve months (NTM) EV/EBITDA, which is higher than AT&T and Verizon’s valuations of approximately 6-7x. It also represents a 1.8x turn premium to the median T-Mobile multiples of around 9.5x since the Sprint merger closed on April 1, 2020. This valuation, along with ongoing questions about T-Mobile’s fiber strategy and investment levels, has led Prentiss to conclude that the company’s stock is fully valued at this time.
In other recent news, T-Mobile US announced a $3.5 billion senior notes offering through its subsidiary, T-Mobile USA. The proceeds are intended for general corporate purposes, including potential share buybacks and refinancing existing debt. Meanwhile, Benchmark analysts have maintained their Buy rating for T-Mobile, with a price target of $275, citing strong growth prospects in postpaid phone units and network quality. The analysts noted T-Mobile’s strategy to expand beyond its initial market penetration target into smaller markets and business accounts. In a potential shift in the telecommunications landscape, AT&T is considering acquiring Lumen Technologies’ fiber-to-the-home assets, which could impact T-Mobile’s market position. Additionally, T-Mobile has updated its executive compensation agreements, which now include provisions for vesting restricted stock units under specific termination conditions. The amendments also outline compensation details for Michael J. Katz, President of Marketing, Strategy, and Products. These developments reflect T-Mobile’s ongoing strategic initiatives and financial planning efforts.
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