Verizon (VZ) Down 0.2% Since Last Earnings Report: Can It Rebound?

22.05.24 17:30 Uhr

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It has been about a month since the last earnings report for Verizon Communications (VZ). Shares have lost about 0.2% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Verizon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Verizon Beats Q1 Earnings Estimates, Misses on RevenuesVerizon started 2024 on a positive note, registering relatively modest first-quarter results with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.The company recorded consolidated postpaid net additions of 253,000 in the quarter along with retail postpaid phone net losses of 68,000. Total broadband net additions for the quarter were 389,000, including 354,000 fixed wireless net additions.Net IncomeOn a GAAP basis, net income in the quarter was $4,722 million or $1.09 per share compared with $5,018 million or $1.17 per share in the prior-year quarter. The year-over-year decrease was primarily attributable to higher operating expenses and interest costs. Excluding non-recurring items, quarterly adjusted earnings were $1.15 per share compared with $1.20 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents.RevenuesQuarterly total operating revenues increased to $32,981 million from $32,912 million in the prior year owing to pricing actions, partially offset by lower wireless equipment revenues driven by a challenging macroeconomic environment and lower postpaid phone upgrades. The top line missed the consensus estimate of $33,332 million.Quarterly Segment ResultsConsumer: Total revenues from this segment improved 0.8% year over year to $25,057 million, as higher service revenues were partially offset by lower equipment revenues in the quarter. However, it missed our revenue estimate of $25,212 million for the segment.Service revenues were up 2.9% to $18,998 million, while wireless equipment revenues declined 8% to $4,490 million. Other revenues totaled $1,569 million, up 3% year over year.The segment recorded 158,000 wireless retail postpaid phone net losses and 216,000 wireless retail prepaid net losses in the quarter. Wireless retail postpaid churn was 1.03%, while retail postpaid phone churn was 0.83%. The company recorded 49,000 Fios Internet net additions as high demand for reliable fiber optic broadband was spurred by higher video consumption. Fixed wireless broadband net additions were 203,000 for the quarter. However, Verizon registered 68,000 Fios Video net losses in the quarter, reflecting the ongoing shift from traditional linear video to over-the-top offerings.The segment’s operating income increased 3.8% to $7,372 million with a margin of 29.4%. EBITDA increased 3.6% to $10,681 million with a margin of 42.6% compared with 41.5% in the prior-year quarter due to lower costs of wireless equipment.Business: The segment revenues were down 1.6% to $7,376 million due to lower wireline and wireless equipment revenues, partially offset by growth in wireless service revenue. It also was lower than our estimates of $7,517 million largely due to challenging macroeconomic conditions.The segment had 178,000 wireless retail postpaid net additions in the quarter, including 90,000 postpaid phone net additions. Wireless retail postpaid churn was 1.51%, while retail postpaid phone churn was 1.13%. Fixed wireless broadband net additions were 151,000 for the quarter. Operating income declined to $399 million from $551 million in the year-ago quarter with respective margins of 5.4% and 7.4%. EBITDA was down 7.2% to $1,527 million owing to decline in high margin wireline revenues for a margin of 20.7% compared with 22% in the year-earlier quarter.Other Quarterly DetailsTotal operating expenses increased 0.5% year over year to $25,460 million, while operating income was down 0.8% to $7,521 million. Consolidated adjusted EBITDA increased to $12,072 million from $11,902 million led by wireless service revenue growth and perceived benefits from lower upgrade volumes for respective margins of 36.6% and 36.2%.Cash Flow & LiquidityVerizon generated $7,084 million of net cash from operating activities in the quarter compared with $8,289 million in the year-ago period. The decline was primarily due to higher working capital requirements owing to higher interests and a discretionary pension contribution of $365 million. Free cash flow was $2,708 million for the quarter compared with $2,331 million in the prior-year period. As of Mar 31, 2023, the company had $2,365 million in cash and cash equivalents with $136,104 million of long-term debt.Guidance ReiteratedFor 2024, Verizon reiterated its earlier guidance and expects wireless service revenue growth in the range of 2%-3.5%. Adjusted EBITDA is likely to grow 1. The company expects adjusted earnings in the range of $4.50 to $4.70 per share. Capital expenditure is estimated to be within the range of $17 billion and $17.5 billion.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in fresh estimates.VGM ScoresAt this time, Verizon has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Verizon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Free – 5 Dividend Stocks to Fund Your Retirement Zacks Investment Research has released a Special Report to help you prepare for retirement with 5 diverse stocks that pay whopping dividends. They cut across property management, upscale outlets, financial institutions, and a couple of strong energy producers.5 Dividend Stocks to Include in Your Retirement Strategy is packed with unconventional wisdom and insights you won’t get from your neighborhood financial planner.Download Now – Today It’s FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Verizon Communications Inc. (VZ): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks

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Analysen zu Verizon Inc.

DatumRatingAnalyst
05.11.2020Verizon overweightJP Morgan Chase & Co.
24.04.2019Verizon Sector PerformRBC Capital Markets
23.04.2019Verizon buyGoldman Sachs Group Inc.
04.09.2018Verizon Equal WeightBarclays Capital
11.05.2018Verizon overweightJP Morgan Chase & Co.
DatumRatingAnalyst
05.11.2020Verizon overweightJP Morgan Chase & Co.
23.04.2019Verizon buyGoldman Sachs Group Inc.
11.05.2018Verizon overweightJP Morgan Chase & Co.
23.04.2018Verizon OverweightBarclays Capital
22.01.2018Verizon Sector OutperformScotia Howard Weil
DatumRatingAnalyst
24.04.2019Verizon Sector PerformRBC Capital Markets
04.09.2018Verizon Equal WeightBarclays Capital
31.07.2017Verizon Sector PerformRBC Capital Markets
14.07.2017Verizon Equal WeightBarclays Capital
21.04.2017Verizon HoldArgus Research Company
DatumRatingAnalyst
18.08.2009Verizon Communications neues KurszielSanford C. Bernstein and Co., Inc.
06.01.2009Verizon Communications DowngradeSanford C. Bernstein and Co., Inc.
24.04.2007Verizon Communications underweightPrudential Financial
21.11.2006Verizon underweightPrudential Financial
21.11.2006Verizon Communications underweightPrudential Financial

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