This Massive Wireless Company May Be a Risky Investment

T-Mobile is expanding 5G Home Internet across Indiana, Kentucky, and Ohio

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T-Mobile US Inc (NASDAQ:TMUS) announced on Feb. 16 that the brand has expanded access to its 5G Home Internet service in 62 cities and towns across Indiana, Kentucky, and Ohio where more than 3 million people still have limited or no access to home broadband. With this upgrade, T-Mobile Home Internet will now be an option for nearly 5 million homes in the area.

TMUS started the month off with a bang, staging a 10% bull gap and toppling several major moving averages including the 80-day, which rejected a mid-December rally. The stock has had a hard time getting past the $129 level, however, leaving it down 13.3% in the last six months. Today, TMUS is down 0.3% at $123.60. 

tmus chart feb 22

When we last checked in with the equity back in early January, sentiment was overwhelmingly bullish. These bulls still reign, at least in the options pits, where TMUS sports a 10-day call/put volume ratio of 4.98 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 88% of readings from the past year. This means long calls have rarely been more popular during the last two weeks. 

Analysts also remain bullish, with all but one of the 14 in coverage holding a "buy" or better rating on the stock. Plus the 12-month consensus price target of $167.25 is a 35.1% premium to current levels. 

A look at the company's financials shows that the the wireless company’s revenues have increased 17% since fiscal 2020 and 85% since fiscal 2018. T-Mobile's net income is also up 4.7% since fiscal 2018. However, TMUS has experienced a notable 13% decline in net income over the past two years. Nonetheless, the firm is expected to grow its earnings by 132% and its revenues by 2.9% for fiscal 2023.

Still, T-Mobile stock does not have the greatest fundamentals. At a forward price-earnings ratio of 43.48 and a price-sales ratio of 1.94, T-Mobile stock trades very rich in value. TMUS also has an awful balance sheet with $6.63 billion in cash and $108.82 billion in total debt, overall making T-Mobile stock a high-risk investment both in the long-term and the short-term.

 

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