United States Cellular: Weak Earnings, And The T-Mobile Deal Is Already Priced In

2025-05-05 09:49:08 ET

Summary

• United States Cellular Corporation's Q1 2025 results were disappointing, with revenue and EBITDA declining, and a significant drop in postpaid subscribers.
• The stock's current valuation is unsustainable, trading at 47x forward earnings and 11x EV/EBITDA, despite weak margins and negative return on equity.
• The T-Mobile deal is already priced in, and shareholders won't directly benefit from the $4.4 billion sale of wireless operations.
• I rate USM stock a Sell due to deteriorating fundamentals and limited upside, with the stock propped up solely by hopes of the T-Mobile acquisition.

Introduction

United States Cellular Corporation ( USM ) reported its Q1 2025 results on May 2, and the market didn't like what it saw. The stock dropped more than 8% after earnings, and frankly, I can understand it. While the Quant Rating still shows "Strong Buy," the actual business performance tells a much less exciting story. Revenue is down, EBITDA is declining, and the company continues to lose postpaid subscribers....

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