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Why T-Mobile Stock Climbed 13.9% Last Month

By Keith Noonan – Jun 6, 2020 at 10:55AM

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The telecom stock is crushing the market in 2020 and now trades up roughly 29% year to date.

What happened

Shares of T-Mobile (TMUS 2.43%) gained 19.8% in March, according to data from S&P Global Market Intelligence. The stock popped early in the month after the company posted an earnings beat in the first quarter, and it closed out the month even higher thanks to momentum for the broader market.

^SPX Chart

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Image source: YCharts.

First quarter revenue for the period came in at $11.1 billion, inching up compared to the prior-year period but missing the average analyst target for sales of $11.4 billion. However, earnings per share of $1.10 topped the average analyst target for per-share earnings of $1.03, and the company posted subscriber additions that were significantly above expectations.

A person using a mobile phone.

Image source: Getty Images.

So what

T-Mobile's monthly branded postpaid phone subscribers climbed 452,000 in the first quarter, topping the average analyst estimate's call for net monthly subscriber additions of 426,000. Churn for branded postpaid and prepaid wireless services in the period came in at best-ever levels. Services revenue rose 5% year over year in the quarter to hit $8.7 billion, and net income climbed 5% year over year to reach $951 million.

Sprint, which completed its merger with T-Mobile in April, saw significantly increased churn in the first quarter. The carrier lost 348,000 net postpaid subscribers and 10,000 prepaid subscribers in the period.

Now what

T-Mobile stock has continued to move higher in June's trading. Shares are up roughly 1% in the month so far.

^SPX Chart

^SPX data by YCharts

Image source: YCharts.

T-Mobile is guiding for adjusted EBITDA between $6.2 billion and $6.5 billion in the second quarter and adjusted free cash flow between $1.3 billion and $1.5 billion. Management expects postpaid net customer additions between 0 and 150,000 in the period.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

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Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$142.28 (2.43%) $3.38

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