T-Mobile (TMUS) Stock Is Down in After-Hours Trading Today After Public Offering Announcement

NEW YORK (TheStreet) -- Shares of T-Mobile (TMUS) were falling 4.3% to $27 after-hours Monday after the wireless carrier announced a new public offering of preferred stock.

T-Mobile announced it will offer 17.4 million shares of mandatory convertible preferred stock with a liquidation preference of $50 a share. The underwriters of the option will have a 30-day option to buy an additional 2.6 million shares to cover any overallotments.

The carrier will use the net proceeds from the offering for general corporate purposes which include capital investments, and the acquisition of additional spectrum aside from the spectrum it may obtain in the FCC's pending AWS-3 spectrum auction.

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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 revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk."

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

  • The revenue growth significantly trails the industry average of 58.8%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,062.00 million or 28.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -18.61%.
  • Compared to other companies in the Wireless Telecommunication Services industry and the overall market on the basis of return on equity, T-MOBILE US INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Currently the debt-to-equity ratio of 1.78 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, TMUS's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 161.1% when compared to the same quarter one year ago, falling from -$36.00 million to -$94.00 million.
  • You can view the full analysis from the report here: TMUS Ratings Report

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