T-Mobile (TMUS): Don't Judge This One by the Cover

Market prices T-Mobile at utility multiples - ~11-12x this year's guided FCF, EV ≈10x EBITDA and 8.6% FCF yield, implying ~1% annual FCF growth need vs management's 2026 service-revenue guide near 8%.

Operational quarter: postpaid net adds 217k (+6%), ARPA $151.93 (+3.9%), service revenue +11% to $18.8bn, broadband adds >500k; core adj EBITDA $9.2bn (+12%), OCF $7.2bn (+5%), adj FCF $4.6bn (+5%).

2026 guidance: postpaid additions 950k-1.05m, core adj EBITDA $37.1-37.5bn, capex ~ $10bn, adj FCF $18.1-18.7bn; trailing FCF ~$18.2bn, FCF margin ~20%, cash ROIC ~13%.

Balance-sheet and technical cautions - net debt ~ $82bn, net debt/EBITDA ~2.9x, debt/equity ~1.5, Altman Z 1.63 flagged; share price ~$191, down ~19% past year, trading below 50- and 200-day averages.

Rated Strong Buy on valuation not quality, 12-month target $245, independent targets cluster $235-261, with additional optionality from fiber, broadband and ad ecosystem excluded.

If I handed you only the price chart, you would close the book on this one. T-Mobile (TMUS) is down roughly 19% over the past year, it trades about 10% under its 200-day moving average, and the tape has given it no sponsorship since late winter. The cover looks worn. Buyers have walked past it on the shelf for months.

Then you open it, and the pages read like a different book. The late-April quarter strengthened the case rather than weakening it, and management raised its own 2026 outlook on the strength of what it saw. That gap between the cover and the pages is the entire setup here. Most of the market is reading the chart and grading the stock on it. The Vulcan work starts somewhere else, with the cash-flow statement. When the chart and the cash disagree this sharply, I put my money on the cash.

T-Mobile (TMUS): Don't Judge This One by the Cover

Keep Reading