NEW YORK (TheStreet) -- T-Mobile (TMUS) shares are up 3.10% to $36.30 in morning trading on Thursday after the CEO of Deutsche Telekom's (DTE), which holds a 66% stake in the company, said that it would consider merging with any partner that could improve the company's profitability.
CEO Tim Hoettges made the comments today at the company's annual shareholders meeting in Cologne, German, perpetuating the global consolidation of the mobile telecom industry.
Yesterday, French telecom giant Altice SA (ATC) agreed to purchase Suddenlink Communications, the U.S. seventh largest cable company, for $9.1 billion, which follows Verizon's (VZ) $4.4 billion purchase of AOL (AOL) last week.
Last year T-Mobile and Sprint (S), the country's third and fourth largest mobile carriers respectively, dropped their merger bid due to regulatory hurdles.
TheStreet Ratings team rates T-MOBILE US INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate T-MOBILE US INC (TMUS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- T-MOBILE US INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, T-MOBILE US INC turned its bottom line around by earning $0.29 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.29).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 58.3% when compared to the same quarter one year prior, rising from -$151.00 million to -$63.00 million.
- The revenue growth significantly trails the industry average of 65.0%. Since the same quarter one year prior, revenues rose by 13.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 47.62% 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. Regardless of the strong results of the gross profit margin, the net profit margin of -0.80% is in-line with the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- You can view the full analysis from the report here: TMUS Ratings Report