The T-Mobile (TMUS) stock price continues to soar this year. It has jumped by 18% this year, while other telecommunication companies like Verizon (VZ) and AT&T (T) have jumped by 15.3% and 10%, respectively.
This performance is a continuation of what happened in the last five years. T-Mobile share price jumped by over 200% in this period, while AT&T and Verizon jumped by 38% and 6.3%, respectively. So, why is the TMUS share price beating its two biggest competitors?
T-Mobile business is gaining market share
The T-Mobie stock price continues to beat its rival companies mainly because it is slowly growing its market share and beating its rivals.
Its most recent results showed that the company continued to add more users on its ecosystem. It added 1.1 million postpaid accounts in 2024 and 6.1 million net customer additions in that period.
More data showed that T-Mobile reported an industry-leading postpaid phone customer additions of 3.1 million during the year.
Most importantly, T-Mobile is not losing customers, thanks to its better service compared to other companies. Its postpaid phone churn was about 0.92%.
This growth is mostly because T-Mobile has a better service than its telecom rivals. Its services cost much lower, with the Essentials Saver plan starting at $50 a month, while Verizon and AT&T starts at $65 and $50 a month.
These numbers have translated to strong revenue and profitability growth this year. T-Mobile’s service revenue rose to $16.9 billion in the fourth quarter and $66.2 billion in the full year. The post-paid revenue was $52.3 billion during the year. These numbers are better than those of its competitors such as AT&T and Verizon.
T-Mobile has also been returning more money to its shareholders through dividends and buybacks. Its buybacks have helped to reduce the outstanding shares from 1.249 billion in 2022 to 1.145 billion today. It spent $11.1 billion in dividends and $3.3 billion in share repurchases. It has paid over 31.4 billion in cumulative payouts.
Read more: Can T-Mobile shares keep heading higher?
Analysts expect TMUS growth to continue
Wall Street analysts are upbeat about T-Mobile’s growth in the future. The average estimate is that its quarterly revenue will be $20.7 billion, a 5.65% increase from the same period a year ago.
They expect the full-year revenue to grow by 5.21% this year to $85.65 billion, followed by $89.94 billion next year.
The challenge, however, is that T-Mobile has become a highly overvalued company. It has a forward P/E ratio of 25, higher than the sector median of 17.8. AT&T has a forward multiple of 12.5, while Verizon has a PE ratio of 10.
The stock is also traveling at the target of most Wall Street analysts. It trades at about $256, where most analysts have placed the target, pointing to more modest upside going forward.
What’s next for the T-Mobile stock price?
The weekly chart shows that the TMUS stock price has been in a strong bullish trend in the past few months. It jumped to a high of $276.52, up by 160% from its lowest level in 2022.
It has retreated to $260 as investors remain concerned about its growth prospects. This pullback is likely because the stock wants to retest the key support at $246.55, where it formed a double-top pattern. A break and retest is one of the most popular continuation signs in the market.
Therefore, the stock will likely retest $246.55 and then resume the uptrend. More gains will be confirmed if the stock rises above the key resistance at $276.5. Such a move will lead to the possibility of it moving to $300.
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