Why T-Mobile (TMUS) Stock Is Down Today

NEW YORK (TheStreet) -- T-Mobile  (TMUS) fell Wednesday after Sprint  (S) withdrew its merger offer for its fellow telecommunications company.

Sprint and T-Mobile had been in talks, but French wireless company Iliad entered the mix last week with a $15 billion offer for 56.6% of the fourth-largest U.S. wireless carrier. T-Mobile rebuffed this proposal, but Sprint withdrew its offer on Tuesday.

Iliad might now move forward with its original $15 billion proposal thanks to Sprint's actions, according to The Wall Street Journal. Furthermore, Iliad reportedly does not feel it needs to increase its offer now that Sprint is out of the running.

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T-Mobile was down 6.46% to $31.72 at 11:19 a.m. More than 8.4 million shares had changed hands, compared to the average volume of 4,162,600.

TheStreet Ratings team rates T-MOBILE US INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate T-MOBILE US INC (TMUS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 2500.00% and other important driving factors, this stock has surged by 36.28% over the past year, outperforming the rise in the S&P 500 Index during the same period.
  • The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 15.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 48.95% is the gross profit margin for T-MOBILE US INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TMUS's net profit margin of 5.44% significantly trails the industry average.
  • Compared to other companies in the Wireless Telecommunication Services industry and the overall market, T-MOBILE US INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite the current debt-to-equity ratio of 1.58, it is still below the industry average, suggesting that this level of debt is acceptable within the Wireless Telecommunication Services industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.01 is sturdy.
  • You can view the full analysis from the report here: TMUS Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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