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T-Mobile (TMUS) Q2 Earnings Beat, Revenues Miss Estimates
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T-Mobile US, Inc. (TMUS - Free Report) reported healthy financial results in the second quarter of 2018, driven by record-high service revenues and profitability.
Net Income
Net income for the reported quarter came in at $782 million or 92 cents per share compared with $567 million or 67 cents per share in the year-ago quarter. The healthy year-over-year increase was attributable to the positive impacts of the adoption of the new revenue standard and hurricane-related reimbursements. The bottom line beat the Zacks Consensus Estimate by 6 cents.
T-Mobile US, Inc. Price, Consensus and EPS Surprise
Quarterly total revenues increased 3.5% year over year to $10,571 million, primarily driven by growth in service revenues, partly offset by lower equipment revenues. The top line missed the Zacks Consensus Estimate of $10,636 million.
Segmental Performance
Total Service revenues were up 6.5% year over year for a record high of $7,931 million, which marked the 17th consecutive quarter of leading the industry in a year-over-year service revenue percentage growth.
Within the Service segment, branded postpaid revenues were $5,164 million, increasing 7.1% year over year. Branded postpaid phone average revenue per user (ARPU) was $46.5, down 1.2% from the prior-year quarter, primarily due to the continued adoption of tax inclusive plans, a decrease in the non-cash net benefit from Data Stash, partly offset by the positive impact from T-Mobile ONE rate plans and a net reduction in service promotional activities. Branded prepaid revenues were $2,402 million, up 2.9% year over year. Branded prepaid ARPU was $38.5, down 0.4% from the prior-year quarter, primarily due to promotional activities. Wholesale revenues were $275 million, up 17.5% year over year, while roaming and other service revenues were $90 million, up 57.9%.
Revenues from Equipment totaled $2,325 million, down 7.2% year over year. Other revenues were $315 million, up 20.2%.
Operating Metrics
Quarterly total operating expenses were $9,121 million compared with $8,797 million in the year-ago quarter. Operating income was $1,450 million compared with $1,416 million in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $3,233 million, up 7.3% year over year.
Cash Flow & Liquidity
For the first six months of 2018, T-Mobile generated $2,031 million of cash from operations compared with $1,714 million in the year-ago period. Free cash flow for the first half of the year was $1,442 million compared with $667 million in the year-ago period.
As of Jun 30, 2018, the company had $215 million of cash and cash equivalents with long-term debt of $12,065 million.
Outlook
For 2018, T-Mobile increased its expectation of postpaid net customer additions to 3-3.6 million, up from the previous target range of 2.6-3.3 million. Adjusted EBITDA is expected between $11.5 billion and $11.9 billion, up from the previous target range of $11.4-$11.8 billion, which includes leasing revenues of $0.6-$0.7 billion.
Cash purchases of property and equipment, excluding capitalized interest, are expected at the higher end of $4.9 billion and $5.3 billion range, unchanged from the previous guidance. This includes expenditures for 5G deployment.
The three-year (2016-2019) compound annual growth rate guidance for net cash provided by operating activities and free cash flow remains unchanged at 7-12% and 46-48%, respectively.
Zacks Rank & Stocks to Consider
T-Mobile currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include AT&T Inc. (T - Free Report) , Aquantia Corp. and Windstream Holdings, Inc. . While AT&T sports a Zacks Rank #1 (Strong Buy), Aquantia and Windstream carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AT&T has a long-term earnings growth expectation of 3.4%. It surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 5.9%.
Aquantia surpassed earnings estimates once in the trailing four quarters with an average positive surprise of 50%.
Windstream surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 23.9%.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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T-Mobile (TMUS) Q2 Earnings Beat, Revenues Miss Estimates
T-Mobile US, Inc. (TMUS - Free Report) reported healthy financial results in the second quarter of 2018, driven by record-high service revenues and profitability.
Net Income
Net income for the reported quarter came in at $782 million or 92 cents per share compared with $567 million or 67 cents per share in the year-ago quarter. The healthy year-over-year increase was attributable to the positive impacts of the adoption of the new revenue standard and hurricane-related reimbursements. The bottom line beat the Zacks Consensus Estimate by 6 cents.
T-Mobile US, Inc. Price, Consensus and EPS Surprise
T-Mobile US, Inc. Price, Consensus and EPS Surprise | T-Mobile US, Inc. Quote
Revenues
Quarterly total revenues increased 3.5% year over year to $10,571 million, primarily driven by growth in service revenues, partly offset by lower equipment revenues. The top line missed the Zacks Consensus Estimate of $10,636 million.
Segmental Performance
Total Service revenues were up 6.5% year over year for a record high of $7,931 million, which marked the 17th consecutive quarter of leading the industry in a year-over-year service revenue percentage growth.
Within the Service segment, branded postpaid revenues were $5,164 million, increasing 7.1% year over year. Branded postpaid phone average revenue per user (ARPU) was $46.5, down 1.2% from the prior-year quarter, primarily due to the continued adoption of tax inclusive plans, a decrease in the non-cash net benefit from Data Stash, partly offset by the positive impact from T-Mobile ONE rate plans and a net reduction in service promotional activities. Branded prepaid revenues were $2,402 million, up 2.9% year over year. Branded prepaid ARPU was $38.5, down 0.4% from the prior-year quarter, primarily due to promotional activities. Wholesale revenues were $275 million, up 17.5% year over year, while roaming and other service revenues were $90 million, up 57.9%.
Revenues from Equipment totaled $2,325 million, down 7.2% year over year. Other revenues were $315 million, up 20.2%.
Operating Metrics
Quarterly total operating expenses were $9,121 million compared with $8,797 million in the year-ago quarter. Operating income was $1,450 million compared with $1,416 million in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $3,233 million, up 7.3% year over year.
Cash Flow & Liquidity
For the first six months of 2018, T-Mobile generated $2,031 million of cash from operations compared with $1,714 million in the year-ago period. Free cash flow for the first half of the year was $1,442 million compared with $667 million in the year-ago period.
As of Jun 30, 2018, the company had $215 million of cash and cash equivalents with long-term debt of $12,065 million.
Outlook
For 2018, T-Mobile increased its expectation of postpaid net customer additions to 3-3.6 million, up from the previous target range of 2.6-3.3 million. Adjusted EBITDA is expected between $11.5 billion and $11.9 billion, up from the previous target range of $11.4-$11.8 billion, which includes leasing revenues of $0.6-$0.7 billion.
Cash purchases of property and equipment, excluding capitalized interest, are expected at the higher end of $4.9 billion and $5.3 billion range, unchanged from the previous guidance. This includes expenditures for 5G deployment.
The three-year (2016-2019) compound annual growth rate guidance for net cash provided by operating activities and free cash flow remains unchanged at 7-12% and 46-48%, respectively.
Zacks Rank & Stocks to Consider
T-Mobile currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include AT&T Inc. (T - Free Report) , Aquantia Corp. and Windstream Holdings, Inc. . While AT&T sports a Zacks Rank #1 (Strong Buy), Aquantia and Windstream carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AT&T has a long-term earnings growth expectation of 3.4%. It surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 5.9%.
Aquantia surpassed earnings estimates once in the trailing four quarters with an average positive surprise of 50%.
Windstream surpassed earnings estimates twice in the trailing four quarters with an average positive surprise of 23.9%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>