Key Takeaways:
- Workforce Action: T-Mobile US plans to lay off 393 workers in Washington by April 2, 2026, as management resets costs while it funds network and broadband expansion.
- Balance Sheet Moves: T-Mobile US issued $2 billion of senior notes in January 2026 and also redeemed 2028 notes at a 5% coupon, tightening maturity management as rates stay restrictive.
- Price Target Path: T-Mobile stock could reach $269 by 2027 as the model applies 4% revenue growth, 24% operating margins, and an 18x exit P/E.
- Return Math: T-Mobile stock’s upside totals 36% from the $198 price to $269, which translates into an 18% annualized return over about 2 years.
T-Mobile US (TMUS) sells wireless voice, data, and devices across the U.S., plus home broadband through fixed wireless and fiber, and it also serves prepaid and wholesale customers across 3 brands.
In the last 12 months, TMUS’ revenue reached $86 billion and gross profit reached $55 billion, while operating expenses totaled $35 billion and operating income reached $20 billion.
Furthermore, TMUS stock’s operating margins rose to 23% in the last 12 months, and that profit base supports continued investment while the business stays exposed to regulatory scrutiny and competitive pricing moves.
At the December 9, 2025 UBS conference, CEO Srini Gopalan set 3 priorities for 2026 that center on network leadership, AI-led digital transformation, and broadband growth and stated, “We are today America’s best network,” and management framed a 70 million-customer perception gap at rivals as a concrete pool of switchers.
T-Mobile reported 90 million T Life downloads and said 70% of upgrades run through digital channels, so execution now depends on app-led switching flows and lower-cost servicing at scale.
Meanwhile, just last month, T-Mobile issued $2 billion of senior notes and redeemed 2028 notes, and the company also disclosed 393 layoffs by April 2, 2026 as it reallocates spending.
The valuation tension is that the model’s $269 target uses an 18x exit multiple versus a 21x 1-year average, so multiple compression must coexist with 24% margins.
What the Model Says for TMUS Stock
T-Mobile’s valuation has already reset, with forward P/E compressing from roughly 25x to about 18x, despite improving margins, rising free cash flow yield, and stable competitive positioning in a capital-intensive wireless market.
Operating margins have expanded into the low-20% range while free cash flow conversion strengthened, indicating earnings quality improved as valuation multiples declined due to investor caution rather than deteriorating fundamentals.
The model assumes 4.2% revenue growth, 24.0% operating margins, and an 18.3x exit multiple, producing a $268 target without relying on multiple expansion or unusually strong growth.
The model signals a Buy, as the 17.6% annualized return exceeds a typical 10% equity hurdle, indicating the expected capital appreciation sufficiently compensates for competitive, regulatory, and capital intensity risks embedded in T-Mobile’s valuation.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for T-Mobile stock:
1. Revenue Growth: 4.2%
T-Mobile’s revenue growth has normalized as U.S. wireless penetration matures, with expansion increasingly dependent on share gains, broadband adds, and pricing discipline rather than industry volume growth.
Current execution supports 4.2% growth as management’s 2026 priorities emphasize network leadership, AI-led digital transformation, and broadband expansion, with leadership citing a 70 million-customer perception gap at rivals as a tangible source of switching demand.
This is above the 1-year historical revenue growth of 3.6%, indicating the model assumes modest acceleration despite visible market saturation.
2. Operating Margins: 24%
Operating margins have risen meaningfully as integration costs faded, network scale improved, and digital efficiency reduced service and support intensity across a largely fixed cost base.
Current conditions support 24.0% margins, reinforced by declining EV/EBITDA from above 12x to near 9x, signaling improved profitability recognition rather than cost inflation.
This is above the 1-year historical operating margin of 18.2%, indicating the model assumes sustained operating leverage beyond recent peak levels.
3. Exit P/E Multiple: 18.3x
The exit multiple capitalizes normalized earnings for a mature wireless operator with durable cash flows, limited growth optionality, and rising free cash flow relevance.
An 18.3x exit multiple aligns with current forward P/E near 18x and rising free cash flow yields near 8%.
The model’s 18.3x exit P/E is in line with the 2026 market assumption of 18.26x, indicating the valuation assumes earnings normalization and sustained cash generation rather than any re-rating driven by sentiment or growth acceleration.
This is below the 1-year historical P/E multiple of 21.0x, indicating the model assumes valuation compression despite improving cash generation and operating stability.
What Happens If Things Go Better or Worse?
T-Mobile stock paths depend on network leadership, broadband adoption, and execution of digital initiatives, setting up a range of possible paths through 2029.
- Low Case: If switching slows and broadband adoption moderates, revenue grows around 5.0% and margins hold near 16.7% → 11.0% annualized return.
- Mid Case: With network leadership and digital execution working as planned, revenue growth near 5.5% and margins improve toward 17.4% → 16.5% annualized return.
- High Case: If switching accelerates and broadband scales faster, revenue reaches about 6.1% and margins approach 17.9% → 21.3% annualized return.
How Much Upside Does T-Mobile Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
