Last update on 2024-06-06

T-Mobile US (TMUS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Insights into T-Mobile US (TMUS) using the Piotroski F-Score analysis for 2023. Final score: 7/9. Evaluate profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 7

We're running T-Mobile US (TMUS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score evaluates companies based on profitability, liquidity, and efficiency. T-Mobile US (TMUS) scored 7 out of 9 on the Piotroski scale, indicating a strong financial position. Key indicators include positive net income, strong cash flow from operations, growing returns on assets, substantial cash flow compared to net income, and a growing current ratio. However, it lost points due to increasing leverage and declining asset turnover. Despite historical fluctuations, recent trends show operational and financial improvements, particularly in gross margin and share buybacks.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski Score and financial indicators, T-Mobile (TMUS) appears to be a strong and stable investment option. It's advisable for investors to consider TMUS for its profitable operations and improved liquidity, though they should be mindful of the increasing leverage and declining asset turnover. Continued focus on improving asset efficiency and managing debt levels will be crucial for sustained growth and stability.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of T-Mobile US (TMUS)

Company has a positive net income?

The criterion here evaluates whether T-Mobile's net income for the year is positive or negative, contributing to the financial stability of the company.

T-Mobile US (TMUS) reported a net income of $8.317 billion in 2023, which is a significant positive figure. Historically, T-Mobile has had positive net income for most years, with notable growth spurts in recent years such as in 2017 ($4.536 billion). The positive net income adds 1 point to its Piotroski Score, signifying improved profitability. Good financial health is indicated, as over the last two decades, the company has shown a positive net income in all years, peaking now at the highest value yet.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates how much cash a company generates from its regular business operations. A positive CFO signifies healthy operational efficiency.

For 2023, T-Mobile US (TMUS) reported a Cash Flow from Operations (CFO) of $18.559 billion, which is positive. This strong CFO reflects improving operational efficiency over the years. Historically, from 2003 to 2023, T-Mobile's CFO has shown a consistent growth from as low as $112.6 million in 2003 to the current $18.559 billion. This trend is undeniably positive, showcasing robustness in TMUS’s core business operations, leading to an addition of 1 point in the Piotroski analysis for this criterion.

Return on Assets (ROA) are growing?

Change in ROA examines if the company's Return on Assets has improved year over year, indicating more efficient asset use.

From 2022 to 2023, T-Mobile US's ROA increased from 0.0124 to 0.0397. Adding 1 point is justified given this growth, suggesting improved asset utilization. Analyzing the 20-year data, T-Mobile's ROA varied significantly but never paralleled the consistent industry median above 0.55, indicating past struggles with asset efficiency.

Operating Cashflow are higher than Netincome?

criterion of Operating Cash Flow exceeding Net Income analyses the cash flow generation efficiency of a business.

T-Mobile US (TMUS) has an operating cash flow of $18,559,000,000 compared to a net income of $8,317,000,000 for the year 2023. The operating cash flow is substantially higher than the net income, which is favorable as it suggests a robust ability to generate cash from its core operations. This financial strength is crucial for covering debt, investment opportunities, and potential distribution to shareholders. OVER THE LAST 20 years, the operating.cash flow tho seen significant growth culminating in its current high, demonstrating steady operational efficiency and.financial.health. Chart Operating.Cash.Flow(OCF) vs. Net Income (NI) 2003: OCF: $112,605,000 vs Ni: $15,358,000 ✴️ 2006: OCF: $364,761,000 Ni |: $56,806,000 . ✴️2023: OCF $18 559000,000 (Ni2023 $8 3170

Liquidity of T-Mobile US (TMUS)

Leverage is declining?

Analyzing changes in leverage involves comparing company debt levels over two periods. This determines if the firm's dependency on debt is increasing.

T-Mobile US's leverage increased from 0.4824 in 2022 to 0.5039 in 2023, reflecting a higher dependency on borrowed capital. This is concerning as it suggests increasing financial risk. Historically, T-Mobile's leverage has seen substantial fluctuations, with noticeable increases since 2018, peaking in 2023. Thus, the criterion for leverage does not score a point in Piotroski analysis as higher leverage signifies higher financial risk and lower financial stability.

Current Ratio is growing?

The change in the Current Ratio measures the company's ability to pay short-term obligations with short-term assets. An increasing Current Ratio is generally a sign of improving liquidity.

In 2023, T-Mobile US (TMUS) has recorded a Current Ratio of 0.9086, an increase from 0.7706 in 2022. This uptick suggests a moderate improvement in the company's liquidity position, adding 1 point to the Piotroski score for this criterion. While this increase is a positive trend, the Current Ratio of TMUS still falls short of the industry median, which stood at 0.9574 in 2023. Historically, the company has shown a volatile Current Ratio with significant fluctuations—from a high of 3.7595 in 2012 to as low as 0.744 in 2019. Despite the increase, TMUS may need to further improve its liquidity to better align with industry standards.

Number of shares not diluted?

Shares outstanding refer to a company's stock currently held by all its shareholders. Decreasing shares outstanding often indicates buybacks.

Comparing the outstanding shares for T-Mobile US, Inc. (TMUS) from 2022 (1,249,763,934) to 2023 (1,185,121,562), we observe a decrease of about 5.2%. This reduction, suggesting buybacks or other methods of reducing shares, adds 1 point according to the Piotroski criterion. Looking at the 20-year trend, TMUS shares outstanding have fluctuated significantly, with recent years showing higher numbers primarily due to acquisitions and financing activities. Such decreases are generally favorable to existing shareholders as they can lead to higher Earnings Per Share (EPS).

Operating of T-Mobile US (TMUS)

Cross Margin is growing?

Gross margin represents the percentage of revenue that exceeds the cost of goods sold (COGS). It's critical for evaluating a company's financial health and pricing strategy.

In 2023, T-Mobile US (TMUS) achieved a gross margin of 0.6157 compared to 0.545 in 2022, marking an enhancement. This increase is a positive indicator for the company, adding 1 point in the Piotroski analysis.Furthermore, historical data reveals a significant upward trend in TMUS's gross margin over the past 20 years. This incline consistently surpasses the industry median in various years, showcasing TMUS's robust financial strategy. Hence, the trend is impressively favorable for this criterion.

Asset Turnover Ratio is growing?

Asset turnover measures the efficiency of a company’s use of its assets in generating sales revenue. It is important as it indicates asset efficiency.

The Asset Turnover for T-Mobile US (TMUS) decreased from 0.3808 in 2022 to 0.375 in 2023. This marks a decrease. A declining asset turnover implies less efficient use of the company's assets in generating revenue. Historical data shows a peak of 1.6647 in 2004 and a general downward trend over the years, highlighting a significant efficiency challenge facing T-Mobile US.