Verizon Communications (VZ) earnings preview: limited growth ahead?

6:07 pm ET, 19 Jul 2018

Verizon Communications Inc. (VZ) is expected to report earnings on July 24 before market open.  The report will be for the fiscal quarter ending June 2018.  Shares are trading at 51.59, up 0.35%.

What are VZ earnings expectations?  What news will the market be watching out for?  

Although Verizon remains the leader in the U.S. wireless market, T-Mobile and Sprint are undermining its duopoly with AT&T at the margin. Disruptive actions by these two smaller rivals--such as offering unlimited data plans--threaten to make overall industry economics less attractive and conflict with Verizon's core strategy of leading with network quality and monetizing increasing amounts of data traffic.

Although Verizon still benefits from a cost advantage over the smaller rivals and will still earn returns above its cost of capital, its ability to command premium pricing will decrease over time.

Ultimately, unlimited data plans put additional strain on the network, potentially impairing network quality. Even if Verizon's network quality remains high, its relative network performance advantage has narrowed as competitor coverage and performance have improved.

Verizon's ability to monetize wireless growth from a pure volume perspective seems limited. The industry's move to a "one size fits all" approach via the standardization of unlimited data plans parallels the move away from metered pricing for voice and text. Carriers will continue to compete on price unless network capacity becomes an issue.

Verizon Communications Inc. has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Delivered on the analyst EPS estimate ($.96 actuals vs. $.96 forecast) in FQ2’17;
  • Delivered on the analyst EPS estimate ($.98 actuals vs. $.98 forecast) in FQ3’17;
  • Missed analyst EPS estimates by 2 cents ($.86 actuals vs. $.88 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 7 cents ($1.17 actuals vs. $1.10 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 20% year-over-year to $1.15, while revenue is expected to grow 4% year-over-year to $31.63 billion.

Over the last month, Verizon Communications Inc. (VZ) returned +7.34%. 

Verizon Communications Inc. (VZ) average analyst price target ($55.67) is 7.91% above its current price ($51.59).

For the latest price and information on Verizon Communications Inc., please visit Finstead and search for "VZ price" or "VZ news".

Verizon Communications Inc. (VZ) Stock Guide

Updated at: 7:44 pm ET, 18 Sep 2020

Before we start: if you're looking for VZ stock price, you can quickly find it out by visiting Finny and typing "VZ quote". If you're looking for a quick scoop on VZ stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "VZ". You'll get all this info in one place. Or you can just type "VZ news" to get the latest stock news.

Looking to buy or sell Verizon Communications Inc. (VZ)? Interested in getting the full scoop on VZ, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this VZ stock guide, we'll address key questions about VZ, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are VZ earnings?
2. What is VZ dividend?
3. What is VZ dividend yield?
4. VZ buy or sell? What is VZ Finny Score?
5. What are the reasons to buy VZ? Why should I buy VZ stock?
6. What are the reasons to sell VZ? Why should I sell VZ stock?
7. What are VZ key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are VZ earnings?

VZ trailing 12-month earnings per share (EPS) is $4.62.

2. What is VZ dividend?

VZ forward dividend is $2.46.

3. What is VZ dividend yield?

VZ forward dividend yield is 4.15%.

Analysis

4. VZ buy or sell? What is VZ Finny Score?

#{finnyScore:50}Our quantitative analysis shows 3 reasons to buy and 3 reasons to sell VZ, resulting in Finny Score of 50.

5. What are the reasons to buy VZ? Why should I buy VZ stock?

Here are the reasons to buy VZ stock:

  • Verizon Wireless is the leader in the industry, with about 114 million retail customers and coverage of more than 98% of the U.S. population.
  • The firm’s wireless customers remain the most loyal in the business, as evidenced by the firm’s industry leading churn, thanks to a high-quality network and strong brand.
  • The firm generates substantial free cash flow, which it uses to pay a generous dividend.
  • VZ profitability is improving. The YoY profit margin change was 13.46 percentage points. See VZ profitability chart.
  • VZ forward dividend yield is 4.15%, higher than the industry (0.72%) and sector (0.66%) forward dividend yields. See VZ forward dividend chart.
  • VZ forward P/E ratio is 12.00, which is low compared to its industry peers’ P/E ratios. See VZ forward P/E ratio chart.

6. What are the reasons to sell VZ? Why should I sell VZ stock?

Let's look at the reasons to sell VZ stock (i.e., the bear case):

  • Verizon Wireless’ network leadership advantage is narrowing as competitors catch up in coverage and capacity. As a result, Verizon’s ability to extract premium pricing is at risk.
  • The wireless industry is becoming increasingly competitive as it matures. If heightened competition forces Verizon to become more promotional, it could hurt the firm’s ability to extract high margins.
  • The cost of maintaining a quality network is high. Wireless capital expenditures topped $11 billion in 2016 (17% of wireless service revenue).
  • VZ quarterly revenue growth was -5.10%, lower than the industry and sector average revenue growth (0.59% and 0.60%, respectively). See VZ revenue growth chart.
  • VZ short interest (days to cover the shorts) ratio is 2.43. The stock garners more short interest than the average industry, sector or S&P 500 stock. See VZ short interest ratio chart.
  • VZ cash to debt ratio is 0.06, lower than the average industry (0.08) and sector (0.09) cash to debt ratio. See VZ cash to debt chart.

Key Stats

7. What are VZ key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for VZ:

Metrics VZ
Price $59.40
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 4.15%
Industry Telecom Services
Sector Communication Services
Number of Employees 144,500
Market Cap $244.81B
Forward P/E Ratio 12.00
Price/Book Ratio 1.89
Revenue (TTM) $129.73B
YoY Quarterly Revenue Growth -5.10%
Profit Margin 14.76%

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