T-Mobile US, Inc. (TMUS – Free Report) will report the results for the third quarter of 2024 on October 23, after the closing bell. Over the last four quarters, the company delivered an earnings surprise of 2.72%, while in the last reported quarter it delivered an earnings surprise of 9.69%.
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The wireless service provider is expected to witness revenue growth year on year, supported by growing demand for its postpaid services. Management’s focus on developing advanced 5G use cases and integrating advanced AI to improve customer service has the wind at its back.
Factors at play
During the quarter, T-Mobile entered into a multi-year partnership with OpenAI aimed at redefining the customer experience and setting new standards for customer service worldwide. The collaboration will have brought together T-Mobile’s extensive expertise in customer relationship management and OpenAI’s advanced AI technology to build the first intent-driven AI decision platform, IntentCX. This initiative is likely to have a positive impact on future results.
During the quarter under review, T-Mobile successfully deployed wireless emergency alerts in the United States for the first time, using SpaceX’s Starlink satellites. TMUS’s lowest multi-server latency has significantly reduced network delays and accelerated application response times. By integrating Starlink’s direct-to-smartphone capabilities with its industry-leading wireless network, T-Mobile has likely mitigated the problems of cellular dead zones, where older cell signals cannot reach.
T-Mobile’s 5G was also used to enhance the fan experience during Major League Baseball All-Star Week in Texas. These developments likely supported sales in the third quarter.
Most important developments in the third quarter
In the September quarter, T-Mobile announced that the company has signed a definitive agreement to form a joint venture (JV) with KKR & Co. Inc. to acquire Metronet with its majority shareholders, Oak Hill Capital and the Cinelli family. It is expected that this partnership will have enabled T-Mobile to meet the evolving demands of its users by providing access to advanced connectivity and technology solutions.
This acquisition is expected to close in 2025, subject to customary closing conditions and regulatory approvals. Upon closing, T-Mobile is expected to acquire a 50% equity interest in the joint venture for approximately $4.9 billion.
General expectations of TMUS
Our estimate for total services revenue is set at $16.73 billion, indicating 5.2% year-over-year growth. The equipment revenue estimate is set at $2.9 billion, indicating a 6.9% year-over-year decline. ARPU for postpaid brands has likely remained stable year over year.
For the September quarter, the Zacks Consensus Estimate for total revenue is pegged at $19.88 billion, indicating an improvement from the reported figure of $19.25 billion in the year-ago quarter. The consensus estimate for adjusted earnings per share is set at $2.34, compared to $1.82 a year ago.
Revenue whispers
Our proven model does not predict a convincing profit margin for T-Mobile this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the likelihood of a profit margin. That is not the case here.
Income ESP: The Earnings ESP, which represents the difference between the most accurate estimate and the Zacks Consensus Estimate, is -0.61%. The Most Precise Estimate is set at $2.33, while the Zacks Consensus Estimate is set at $2.34. Our Earnings ESP filter can help you discover the best stocks to buy or sell before they are reported.
Zacks Rank: T-Mobile currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you might want to consider, as our model shows they have the right combination of elements to deliver an earnings surplus this season.
Corning founded (GLW – Free Report) will publish quarterly figures on October 29. It has an Earnings ESP of +1.08% and a Zacks Rank #3. You can see it The complete list of today’s Zacks #1 Rank stocks can be found here.
The Earnings ESP for Qualcomm Technologies, Inc. (QCOM – Free Report) is +0.48% and has a Zacks Rank of 3. The company will report its quarterly earnings on November 6.
The Earnings ESP for Arista Networks, Inc. (ANET – Free Report) is +0.96% and has a Zacks Rank of 2. The company will report its quarterly earnings on November 7.
