T-Mobile Stock: It Beat and RAISED Cash Guidance — Then Crashed 11%. So Why We Say BUY

T-Mobile US (TMUS) Q2 2026 — T-Mobile US (TMUS), America's postpaid wireless leader, reported a strong Q2 2026: diluted EPS of $2.99 beat the ~$2.60 estimate (+5% YoY), Core Adjusted EBITDA rose 12% to $9.5B, total service revenue grew 9% to $19.0B (industry-leading), and Adjusted Free Cash Flow was $4.8B — and management RAISED full-year cash guidance (Adjusted FCF to $18.4–$18.8B, operating cash flow to $28.4–$28.8B). Postpaid phone net adds of 777K led the industry (0.80% phone churn) and 5G home broadband added 406K. Yet the stock CRASHED ~10.7% to $170.42 — near its 52-week low, ~35% off its $261.56 high — because total revenue of $22.79B slightly missed, postpaid account adds slowed 13% to 277K, and it was the first quarter in ages without an across-the-board guidance raise. Priced for perfection, it delivered merely excellent. After the crash the stock trades at ~9x FCF, ~6.9x EV/EBITDA and a ~10% FCF yield. Our call: BUY, 4/5, fair value ~$230. T-Mobile US is the un-carrier — the disruptor that stormed from number three to America's number-one postpaid wireless company, and after absorbing Sprint it runs the deepest 5G network in the country (a record NPS of 46 and a clean sweep of the independent network awards). Q2 2026 was a genuinely good quarter: diluted EPS of $2.99 beat (~+5% YoY), total service revenue rose 9% to $19.0B (industry-leading), postpaid service revenue jumped 13% to $15.9B, Core Adjusted EBITDA grew 12% to $9.5B, and Adjusted Free Cash Flow hit $4.8B. Postpaid PHONE net adds of 777K led the entire industry with phone churn of just 0.80%, and 5G home broadband added 406K. Management even RAISED full-year cash guidance — Adjusted FCF to $18.4–$18.8B and operating cash flow to $28.4–$28.8B — while reiterating account growth (950K–1.05M) and Core EBITDA ($37.1–$37.5B). And yet the stock fell almost 11% to ~$170, near a 52-week low: total revenue of $22.79B came up a hair light, postpaid ACCOUNT adds slowed 13% to 277K (churn up to 0.99% on a broadband-only mix and a coming rate-plan reset), and — for the first time in ages — guidance didn't rise across the board. A stock priced for perfection delivered merely excellent, and got punished. The catch now cuts the other way: after a ~35% drawdown, TMUS trades at ~9x free cash flow, ~6.9x EV/EBITDA and a ~10% FCF yield, with an aggressive buyback shrinking the share count ($3.3B returned in Q2, $54.6B since 2022). Our owner-earnings DCF — conservatively haircutting the ~$18.6B FCF guide to ~$15.5B of sustainable owner earnings — lands fair value near $230, ~35% above the price. Our call: BUY, 4/5. The reservation is a maturing growth story (next quarter's subscriber number could look bumpy on the rate-plan reset) and ~$75B of net debt, which is why it isn't 5/5. But the best network in America went on sale on a sentiment wobble, and we're aligned with the Street's Buy (avg target ~$243, 45 of 54 analysts). Own it for the network moat and the cash, add on further fear toward the low $160s, and watch the subscriber trend. Not financial advice. THE CALL: BUY (4/5, A WORLD-CLASS NETWORK ON SALE — A BEAT-AND-RAISE-ON-CASH PUNISHED FOR MERELY SLOWING GROWTH) — base-case value ~$230 vs ~$170 today. What to watch: evidence the growth slowdown is temporary — postpaid account adds re-accelerating after the Q3 rate-plan modernization, broadband and U.S. Cellular synergies flowing through, and Adjusted Free Cash Flow marching toward $20B — which would re-rate the stock back toward the Street's ~$243 target; the risk to respect is a genuine price war with Verizon and AT&T, postpaid phone net adds rolling over, or churn climbing well beyond this quarter's blip, which combined with ~$75B of net debt could push a maturing growth name down toward a boring, high-yield telecom multiple Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.