T-Mobile (TMUS) Stock Gains on Comcast Acquisition Talks

NEW YORK (TheStreet) -- Shares of T-Mobile US (TMUS) were gaining 2.3% to $39.75 Wednesday following a report that Comcast (CMCSA) is in talks to potentially acquire the mobile carrier.

T-Mobile parent company Deutsche Telekom (DTEGY) is holding talks with multiple companies about acquiring the U.S. company, according to German magazine Manager Magazin. Comcast is reportedly seen as the more attractive of the companies interested in T-Mobile, because it has the resources to make an offer to purchase all shares of the carrier.

Satellite TV provider Dish (DISH) is also among the companies interested in acquiring T-Mobile.

Shares of Comcast were up 0.4% to $59.12 following the report.

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 some important positives, 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 solid stock price performance. 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 ($0.73 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 56.4%. 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.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: TMUS Ratings Report

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