What Is Going On With T-Mobile Stock?

T-Mobile US (TMUS) stock trades at 16.3 times earnings, well below the 22.9 multiple for the median S&P 500 company. The shares lost 28.3% over the past year while the S&P 500 returned 16.2%. Even with that underperformance, the wireless carrier is still signing up postpaid accounts. For the low valuation to represent a bargain, those new customers must translate into profit as well as revenue. So does the business behind that price hold up?

Is T-Mobile Still Adding Customers And Cash?

The company remains strong on both fronts. T-Mobile’s revenue grew 9.7% over the four quarters to June 2026, outpacing the 8.3% growth of the median S&P 500 company. Management noted on the fiscal Q2 2026 call that T-Mobile added 277,000 postpaid net accounts during the quarter.

That top-line growth is generating substantial cash. T-Mobile produced $16.2 billion of free cash flow over the same twelve months, translating to a free cash flow yield of 9.4% at today’s price. In September 2026, the board also raised the quarterly dividend by 15%.

T-Mobile’s Profit Shrank As Revenue Grew

The bottom line is where the business falters. T-Mobile’s operating margin was 20.1% over the four quarters to June 2026, a decline from 23.1% in the twelve months before. Over the same two periods, net income fell to $10.6 billion from $12.2 billion. The current P/E ratio rests on that diminished profit.

The faster sales growth is also a relatively recent development. Revenue growth averaged 5.5% across the three twelve-month periods ended June 2024, June 2025, and June 2026, coming in well below the latest year’s pace. Last year, T-Mobile bought UScellular and entered a fiber joint venture. On the fiscal Q2 2026 call, management said the customers who came with those deals pay less per account. So T-Mobile is driving more sales volume, but keeping less of each dollar than it did a year ago.

T-Mobile Is Updating Its Old Rate Plans

Management is relying on price. On the fiscal Q2 2026 call, the company outlined plans to modernize legacy rate plans through what it calls a more-for-more approach. T-Mobile expects revenue per postpaid account to grow 2.5% to 3% in 2026. Management warned on the call that it expected customer losses to rise for a while as a result. The company guided to about 250,000 postpaid net account additions in fiscal Q3 2026, the quarter that ended in September.

Quarterly margins are already moving in a positive direction. T-Mobile’s operating margin climbed from 15.4% in fiscal Q4 2025 to 19.5% in fiscal Q1 2026. By fiscal Q2 2026, it reached 24.1%, close to the 24.7% achieved a year earlier. Management also raised its full-year 2026 adjusted free cash flow guide, but specified that the increase came mainly from lower cash income taxes.

What A T-Mobile Buyer Is Betting On

The headline earnings multiple obscures the company’s leverage. T-Mobile’s debt equals 69.4% of its market value, compared to 20.0% for the S&P 500. If the margin does not recover, a buyer is left holding a heavily indebted business that keeps less of what it sells than it did a year ago.

Buying T-Mobile shares here is less a bet that the market has missed a sound business, and more a wager that the company repairs its profit margin. Customer gains and cash generation are holding steady, and profit has yet to catch up with them. For investors, T-Mobile’s operating margin over twelve months is the critical number to watch in its next quarterly report, which will cover the three months to September 2026.

How To Act On TMUS?

Not necessarily on T-Mobile US alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. In T-Mobile US’s own industry, EchoStar stock rose 236% over the five years to October 2026, while T-Mobile US stock rose 42%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.