Will Higher Revenues Buoy T-Mobile's (TMUS) Q2 Earnings?
Zacks Investment Research | Jul 24, 2019 08:55AM ET
T-Mobile US, Inc. (NASDAQ:TMUS) is scheduled to report second-quarter 2019 results on Jul 25, before the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 23.2%. Notably, T-Mobile surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average beat being 12.1%.
The wireless carrier is likely to report higher year-over-year revenues on the back of solid customer growth and low postpaid phone churn. Whether this can result into an earnings beat remains to be seen.
Let’s find out how things are shaping up prior to the announcement.
Factors at Play
Investments in new geographies, customer segments and customer care continued to fuel T-Mobile’s momentum. The company has been witnessing strong response from new customer segments and rate plans, including T-Mobile for Business.
During the second quarter, the company inked a major content distribution agreement with Viacom — the owner of Nickelodeon, MTV, Comedy Central and Paramount Pictures. The move played an important role in T-Mobile’s delivery of new mobile video services to consumers. The multi-year deal allowed T-Mobile to bring together live linear feeds of Viacom channels along with a range of on-demand content for about 80 million customers.
Further, T-Mobile unveiled an enhanced version of its Layer3 TV service with advanced features — TVision Home. The company also entered into a deal with Amazon (NASDAQ:AMZN) to add Prime Video to TVision Home. Markedly, the deal enabled T-Mobile to offer TVision customers with various live feeds and prime content via the Prime Video application. Such tailwinds are expected to get translated into top-line growth.
Moving on, the Zacks Consensus Estimate for revenues from Service, which accounts for the lion’s share of total revenues, is pegged at $8,433 million, up from $8,277 million reported in the preceding quarter. Revenues from Equipment are estimated to be $2,410 million compared with $2,516 million reported in the previous quarter.
Total revenues for the June quarter are estimated to rise to $11,139 million from $10,571 million, reported in the prior-year quarter. Adjusted earnings per share are pegged at 99 cents. The company reported earnings of 92 cents a year ago.
What Our Model Says
Our proven model does not conclusively show that T-Mobile is likely to beat earnings estimates in the to-be-reported quarter as it does not possess one of the two key components. A stock needs to have both a positive Original post
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