T-Mobile US Inc (TMUS)

Conclusion

T-Mobile US provides wireless voice, messaging and data services in the United States, Puerto Rico and the US Virgin Islands, sold under the T-Mobile, Metro by T-Mobile and Mint Mobile brands. On 2026-11-09 the share price was 168.71 USD, giving a market capitalisation of 178.7 billion USD.

The verdict is undervalued. The trailing P/E of 15.8 compares with a ten-year median of 23.7, a premium of -33.4%, and EV/EBITDA of 8.6 compares with a median of 11.2, a premium of -22.6%. The discounted cash flow gives 413.38 USD per share at a discount rate of 8.87%. The fair value band runs from 250.26 to 375.39 USD with a midpoint of 312.83 USD, a margin of safety of 85.4% at the current price. The fair value from historical multiples is 212.27 USD. The reverse DCF implies revenue growth of -3.5%, against five-year revenue growth of 5.2%.

The case rests on an operating margin of 21.0%, free cash flow conversion of 160.8% on a trailing basis, and five-year EPS growth of 29.7%. The weakest numbers are the Altman Z-score of 1.59, net debt to EBITDA of 3.34 and a quick ratio of 0.63. A continued fall in cash generation or a rise in leverage would challenge the valuation.

Financial health

Financial strength is red, held back by the Altman Z-score and by the lack of any good reading among the balance sheet measures. The current ratio is 0.91, the quick ratio 0.63, net debt to EBITDA 3.34 and debt to equity 2.10, with interest coverage at 4.81. The Altman Z-score is 1.59, which falls in the distress zone, although the Altman model was designed for manufacturers and the company is not one. Insolvency risk is low, about 0.6% by the estimate of the Ohlson model over one to two years, based on figures to 2025-12-31. The probability is modest, but the balance sheet leaves little room for a weaker year.

Earnings quality

Earnings quality is yellow, with one good reading and two neutral ones. Free cash flow conversion is 160.8% on a trailing basis and 75.6% over five years, so the recent year is well above the longer average. Accruals are -7.9%, and stock-based compensation is 0.9% of revenue, leaving free cash flow after it at 17.33 billion USD. The share count fell at a compound rate of -0.4% over five years, which reflects buybacks. The Piotroski score is 6 of 9. The Beneish M-score is not available. Earnings beat expectations in 7 of the last 8 quarters, with an average surprise of 9.3%. Current-year estimates rose 2.2% over 90 days and next-year estimates rose 0.8%.

Profitability

Profitability is green, with three good readings. The operating margin of 21.0% is well above its ten-year median of 12.2%, and the net margin of 12.1% compares with a median of 7.2%. The gross margin of 54.4% is below its median of 57.0%. ROIC is 8.8% against a WACC of 6.8%, and the reported ROIC minus WACC value is 1.9%, which is neutral. The five-year median ROIC is 6.4%. Return on equity is 20.1%, but the DuPont split shows leverage at work: a net margin of 12.5%, an asset turnover of 0.40 and an equity multiplier of 3.70 for 2025. Part of the return therefore comes from borrowing rather than from the operations alone.

Growth

Growth is green, with three good readings and one neutral. Revenue compounds at 3.5% over three years, 5.2% over five years and 10.5% over ten years. Earnings per share compound at 67.6% over three years, 29.7% over five years and 27.0% over ten years. Revenue grew in 8 of the last 10 years. The revenue growth rate has slowed over the recent three years, while earnings growth has been much faster, which the reader should weigh against the modest top-line trend.

Valuation

Valuation is green. The current P/E is 15.8 against a ten-year median of 23.7, a premium of -33.4%, and EV/EBITDA is 8.6 against 11.2, a premium of -22.6%. Price to sales is 1.90 against a median of 1.98, a premium of -3.9%, while price to book is 3.17 against 2.57, a premium of 23.5%. The discounted cash flow gives 413.38 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 212.27 USD. The fair value band is an order of magnitude built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The reverse DCF implies growth of -3.5%, and the reported comparison with five-year revenue growth is -8.7%. The dividend yield is 2.5%, the forward yield 2.9%, and the payout on free cash flow 24.5%.

Risks

The most important weak numbers are the Altman Z-score of 1.59, net debt to EBITDA of 3.34 and the quick ratio of 0.63. Higher leverage would raise financing costs and narrow room for buybacks. A current ratio of 0.91 means short-term obligations exceed liquid assets, so refinancing would be needed if cash flow weakened. Interest coverage of 4.81 leaves less cushion if operating profit fell. The Beneish M-score is not available, so manipulation risk in earnings cannot be checked here. This analysis has no debt maturity schedule and no revenue split by segment, so the timing of obligations and the sources of growth cannot be assessed.