Barbarian At The Gate: T-Mobile US (TMUS)

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.

Trade-Ideas LLC identified T-Mobile US ( TMUS) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified T-Mobile US as such a stock due to the following factors:

  • TMUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $118.7 million.
  • TMUS has traded 2.0 million shares today.
  • TMUS traded in a range 259.4% of the normal price range with a price range of $1.87.
  • TMUS traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on TMUS:

T-Mobile US, Inc. provides mobile communications services under the T-Mobile, MetroPCS, and GoSmart brands in the United States, Puerto Rico, and the U.S. Virgin Islands. It offers postpaid and prepaid wireless voice, messaging and data services, and wholesale wireless services. TMUS has a PE ratio of 147.3. Currently there are 10 analysts that rate T-Mobile US a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for T-Mobile US has been 4.5 million shares per day over the past 30 days. T-Mobile US has a market cap of $23.8 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.72 and a short float of 2.4% with 3.80 days to cover. Shares are down 12.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates T-Mobile US as a hold. 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 ratings report include:
  • The strong earnings growth this company has enjoyed -- up -- has apparently played a role in driving up its share price by a solid 25.20%. In addition, the rise in the general market has likely contributed to this stock's strong performance during this past year.
  • The revenue growth came in higher than the industry average of 3.4%. 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.

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