DCF Studio

    TMUS · NMS · Communication Services

    T-Mobile US, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 134.40

    Market price

    USD 168.18

    Implied upside

    -20.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 134.40-20.1%
    Exit multiple
    USD 166.34-1.1%
    Market price
    USD 168.18

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn7bn14bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 91.4bnUSD 94.7bnUSD 98.0bnUSD 101.5bnUSD 105.1bn+3.5%
    EBITUSD 16.3bnUSD 16.9bnUSD 17.5bnUSD 18.1bnUSD 18.8bn+3.5%
    NOPATUSD 12.9bnUSD 13.4bnUSD 13.8bnUSD 14.3bnUSD 14.8bn+3.5%
    Add depreciation & amortisationUSD 14.8bnUSD 15.3bnUSD 15.8bnUSD 16.4bnUSD 17.0bn+3.5%
    Less capital expenditureUSD -14.8bnUSD -15.3bnUSD -15.9bnUSD -16.4bnUSD -17.0bn+3.5%
    Less increase in working capitalUSD -1.1bnUSD -1.1bnUSD -1.2bnUSD -1.2bnUSD -1.2bn+3.5%
    Free cashflow to firmUSD 11.8bnUSD 12.2bnUSD 12.6bnUSD 13.1bnUSD 13.5bn+3.5%
    Discount factor0.96950.91140.85670.80530.7570-
    Present valueUSD 11.4bnUSD 11.1bnUSD 10.8bnUSD 10.5bnUSD 10.2bn-2.7%
    Present Value Of The ForecastUSD 54.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.552Reported 0.331, pulled toward 1.0 (Blume)
    Cost of equity8.03%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 180.4bn59.6% of capital
    Total debtUSD 122.3bn40.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.38%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 134.40

    80% of EV

    Forecast FCFF, final year
    USD 13.5bn
    Capex at depreciation, working capital in reinvestment
    USD 14.8bn
    Less reinvestment at g/ROIC (27.6% of NOPAT)
    USD -4.1bn
    Capitalised
    USD 10.7bn
    ROIC (reported)
    9.1%
    Terminal value, undiscounted
    USD 283.4bn
    Terminal value, discounted
    USD 214.6bn
    Enterprise value
    USD 268.7bn
    Less net debt
    USD 116.7bn
    Equity value
    USD 152.0bn

    Exit at 9.3x EBITDA

    Value per shareUSD 166.34

    82% of EV

    Terminal value, undiscounted
    USD 331.2bn
    Terminal value, discounted
    USD 250.7bn
    Enterprise value
    USD 304.8bn
    Less net debt
    USD 116.7bn
    Equity value
    USD 188.1bn

    Spread between methods: 21%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.38%264.54307.54373.07485.55724.77
    5.38%171.69189.13212.42245.24295.20
    6.38%116.84124.68134.40146.84163.39
    7.38%80.6184.1388.2693.2199.30
    8.38%54.8956.2457.7359.4161.33

    Outlined: this model. Green text: above today's price of 168.18. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year3.5%6.9%+3.4pp
    EBIT margin17.9%20.4%+2.5pp
    Discount rate6.4%5.9%-0.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.