$TMUS · Parkev Tatevosian, CFA · 2026-11-09

Verizon, AT&T, and T-Mobile are under direct threat or at risk of disruption as a result of this increased competition. Therefore, I will be closely monitoring these three companies to assess the results resulting from this new competitor.

In this video, I'll take a look at T-Mobile to determine whether it's a buying opportunity or whether investors should sell the stock before the competition changes and its prospects worsen.

T-Mobile is the fastest growing of the three major US telecom companies, with its earnings per share expected to grow by about 18% over the next few years, compared to 10% for AT&T and 8% for Verizon.

In addition, T-Mobile achieved near double-digit revenue growth in the last quarter, and management expects to add nearly one million net subscribers by 2026.

So, it is already one of the fastest-growing companies and is becoming increasingly competitive with higher network speeds according to consumer surveys. It is impressive that T-Mobile achieved this while simultaneously improving its profitability.

Its operating profit margin has nearly tripled over the past decade, rising from about 7% in 2017 to 21.8% over the past twelve months. It is true that its competitors, including AT&T and Verizon, are achieving operating profit margins around these levels, but T-Mobile's improvement has been more consistent and pronounced over the past decade.

These telecom companies are also among the most indebted in the world, but T-Mobile has less debt than Verizon and AT&T.

T-Mobile boasts around $114 billion in total long-term debt, and this large amount of debt among the three telecom companies is one of the reasons why I think dealing with competition will be difficult.

They do not have much room to maneuver in responding to the growing threats from SpaceX, which will find it easier to raise capital from investors.

The trust that SpaceX has built among its investor base is better than the trust that Verizon, AT&T, and T-Mobile have built with their shareholder bases, so the cost of capital may be lower for SpaceX, even though it is a riskier, less established business that is still losing money, and logically, its cost of capital should be much higher.

Therefore, in view of that growing threat, T-Mobile's stock price and valuation have been declining, especially the valuation. When I look at it based on the price-to-earnings ratio, it is trading at 11.16, which is the lowest level it has traded at according to this valuation metric in recent years.

In addition, when compared to the company's long-term earnings per share estimates, it is trading at a lower forward price-to-earnings ratio than long-term earnings per share growth estimates.

This is a version of the price-to-earnings-to-growth (PEG) ratio, which, when it is less than one, is generally considered an attractive valuation for buying a particular stock.

In this case, it certainly seems like an attractive valuation.

I also like to look at the valuation using the discounted cash flow model, and for T-Mobile, I updated this model today, and calculated a fair value for the stock at $222. The current market price is 159.

So, even from the perspective of my discounted cash flow model, T-Mobile stock appears to be undervalued.

Therefore, T-Mobile stock was rated as a buy opportunity by me throughout the year, but I had a low level of confidence in that buy rating. Today, after assessing the company’s latest results and long-term performance, comparing them to my estimates of what I believe it will achieve in earnings per share, and taking into account the growing threat from SpaceX, the stock looks like a better opportunity today.

So, I am now more confident in T-Mobile than I was the last time I evaluated the company, which was a few months ago. So, I raised my confidence level to a medium level, and I did so on November 4, 2026.