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Can Higher Consumer Revenues Buoy Verizon (VZ) Q4 Earnings?
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Verizon Communications Inc. (VZ - Free Report) is scheduled to report fourth-quarter 2022 results before the opening bell on Jan 24. In the fourth quarter, the Consumer segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Consumer segment includes the retail wireline and wireless businesses.
In the fourth quarter, Verizon continued to deploy 100 MHz of C-Band spectrum to further expand its 5G coverage and reached more than 175 million people with 5G Ultra Wideband service. The company is witnessing significant 5G adoption and fixed wireless broadband momentum while increasing demand for premium mobility and broadband offerings instill optimism. It extended its high-speed fiber Internet across additional homes in Massachusetts. These are likely to get reflected in the upcoming quarterly results.
During the quarter, Verizon offered customers the Welcome Unlimited plan with unlimited talk, text and data on its 5G Nationwide network for just $25 per line per month for four lines. It also launched new Prepaid Unlimited plans for as low as $50 per month, including free access to Disney+ for six months. In addition to the new Unlimited plans, Verizon Prepaid offered a 15GB data plan for as low as $35 per month with Auto Pay. These developments are likely to have had a positive impact on Verizon’s performance.
In the to-be-reported quarter, the company began moving customer traffic onto the new cloud-native, containerized 5G design core for improved service agility, flexibility and automated scalability. The higher level of operational autonomy is likely to facilitate the seamless functioning of the next generation of services enabled by new network technologies. This is likely to have translated into incremental revenues.
However, adverse foreign currency translations and high operating costs are likely to have led to soft margins in the fourth quarter. Continuous infrastructure investments for fiber and 5G deployments are expected to have weighed on the margins.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Due to challenging macroeconomic conditions and high inflationary pressures, several customers are likely to have faltered on their monthly bill payments, further affecting the quarterly performance.
Overall Expectations
The Zacks Consensus Estimate for revenues from the Consumer segment is pegged at $26,749 million, indicating an improvement from $25,697 million reported in the year-ago quarter. Operating income from the segment stands at $7,165 million, suggesting a fall from $7,349 million.
The Zacks Consensus Estimate for total revenues is pegged at $35,059 million. It reported revenues of $34,067 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.21, which suggests a decline from the year-ago tally of $1.31.
Earnings Whispers
Our proven model predicts an earnings beat for Verizon for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Verizon Communications Inc. Price and EPS Surprise
Here are some other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +3.00% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +10.48% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
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Can Higher Consumer Revenues Buoy Verizon (VZ) Q4 Earnings?
Verizon Communications Inc. (VZ - Free Report) is scheduled to report fourth-quarter 2022 results before the opening bell on Jan 24. In the fourth quarter, the Consumer segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Consumer segment includes the retail wireline and wireless businesses.
In the fourth quarter, Verizon continued to deploy 100 MHz of C-Band spectrum to further expand its 5G coverage and reached more than 175 million people with 5G Ultra Wideband service. The company is witnessing significant 5G adoption and fixed wireless broadband momentum while increasing demand for premium mobility and broadband offerings instill optimism. It extended its high-speed fiber Internet across additional homes in Massachusetts. These are likely to get reflected in the upcoming quarterly results.
During the quarter, Verizon offered customers the Welcome Unlimited plan with unlimited talk, text and data on its 5G Nationwide network for just $25 per line per month for four lines. It also launched new Prepaid Unlimited plans for as low as $50 per month, including free access to Disney+ for six months. In addition to the new Unlimited plans, Verizon Prepaid offered a 15GB data plan for as low as $35 per month with Auto Pay. These developments are likely to have had a positive impact on Verizon’s performance.
In the to-be-reported quarter, the company began moving customer traffic onto the new cloud-native, containerized 5G design core for improved service agility, flexibility and automated scalability. The higher level of operational autonomy is likely to facilitate the seamless functioning of the next generation of services enabled by new network technologies. This is likely to have translated into incremental revenues.
However, adverse foreign currency translations and high operating costs are likely to have led to soft margins in the fourth quarter. Continuous infrastructure investments for fiber and 5G deployments are expected to have weighed on the margins.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Due to challenging macroeconomic conditions and high inflationary pressures, several customers are likely to have faltered on their monthly bill payments, further affecting the quarterly performance.
Overall Expectations
The Zacks Consensus Estimate for revenues from the Consumer segment is pegged at $26,749 million, indicating an improvement from $25,697 million reported in the year-ago quarter. Operating income from the segment stands at $7,165 million, suggesting a fall from $7,349 million.
The Zacks Consensus Estimate for total revenues is pegged at $35,059 million. It reported revenues of $34,067 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.21, which suggests a decline from the year-ago tally of $1.31.
Earnings Whispers
Our proven model predicts an earnings beat for Verizon for the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.42%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Verizon Communications Inc. Price and EPS Surprise
Verizon Communications Inc. price-eps-surprise | Verizon Communications Inc. Quote
Zacks Rank: Verizon has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Motorola Solutions, Inc. (MSI - Free Report) is set to release quarterly numbers on Feb 8. It has an Earnings ESP of +0.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +3.00% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +10.48% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.