T-Mobile US (TMUS) currently operates as a Capital Compounder, a business model characterized by the systematic prioritization of share count reduction. Over the last twelve months, the company has reduced its total shares outstanding by 3.5%.

Why does this matter? The answer is “denominator effect”: while TMUS’s underlying net income has grown 51.3% annually in the last three years, its earnings per share (EPS) has expanded at 56.9%. What does this contribute to? Steady capital gain. In the last 3 years, the stock returned 39% in price appreciation (11.7% annualized), with peak return reaching 94%. Of course, a share buyback is only one of the components driving capital gain, and there are other factors at play…