Investors should always pay close attention to what a company’s management says about its expectations and risks.

These insights are often the best source of information for anyone relying on public disclosures.

It becomes even more critical when management warns about potential challenges, as it signals an effort to set realistic expectations.

This is exactly what happened with T-Mobile (TMUS) last week when CEO Mike Sievert made comments that initially raised concerns among investors.

Following his remarks at the UBS Global Media and Communications Conference, T-Mobile’s shares dropped 5% in a single day.

Sievert’s comments centered around normal seasonal trends for the fourth quarter, but they were widely interpreted as a cautionary signal about the company’s performance.

He noted that while the quarter was progressing well and guidance remained on track, risks could emerge in the latter half of the quarter.

This cautious tone, combined with his observation that device upgrade rates were “pretty low”, triggered concerns about potential softness in results.

The market reaction was swift, as investors viewed these comments as a possible warning about slowing growth.

In an effort to clarify, Sievert later explained that his remarks were misunderstood. 

He emphasized that the fourth quarter was trending at least in line with expectations, possibly better, and reaffirmed the company’s projection of around 3 million postpaid phone net additions for the year.

Despite this reassurance, the damage was already done.

This reaction comes against a backdrop of strong financial performance for T-Mobile in the last quarter. 

The company reported a 4.7% increase in revenue year-over-year and a 2% increase quarter-over-quarter.

Margins also improved significantly, with the net income margin rising from 11.1% last year to 15.2%.

The company also raised its full-year guidance, projecting 5.7 million net customer additions.

T-Mobile has also been focused on expanding its broadband services and rolling out 5G solutions.

By targeting smaller cities and rural areas, the company aims to capture untapped market opportunities.

Management expects these initiatives to drive a 5% annual growth rate in service revenues through 2027, which could add substantial long-term value.

In addition, T-Mobile’s commitment to shareholder returns remains strong, with plans to return $50 billion through share repurchases by 2027.

So far, the company has already repurchased $22.7 billion worth of shares this year, equivalent to nearly 8% of its market capitalization.

Despite these positives, T-Mobile’s valuation currently doesn’t look inexpensive based on Uniform Accounting.

The company trades at 25.7x Uniform P/E, which is average historically but has all-time highs of 1.9x P/B.