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Can Verizon (VZ) Pull Off a Surprise This Earnings Season?
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U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) is slated to report fourth-quarter 2016 results, before the opening bell on Jan 24.
Last quarter, Verizon posted an earnings surprise of 2.02%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 1.06%.
We note that Verizon have underperformed the Zacks categorized Wireless National industry’s growth over the past three months. The stock added 4.68% compared with the industry’s gain of 6.13% over the time span.
Let’s see how things are shaping up for this announcement.
Factors at Play
We are impressed with Verizon’s plans of diversifying its business model. Upcoming 5G wireless network, diversification into digital ad and content market, deployment of high-speed fiber network and forging into IoT space are long-term growth prospects for the company. The LQD WiFi LLC buyout (a New York-based firm specializing in IoT technology) and ‘IoT Fast Track’ services (to small business owners) are likely to boost Verizon’s IoT prospects.
FCC approval for XO Comm. buyout, license to install FiOS in Boston along with small cell densification and expansion of dark fiber hint at Verizon’s steps in the fiber space. The densification of cell network will help the company to install and build its upcoming 5G network.
Notably, this is just the beginning of fiber rollout on Verizon’s part and we hope to see many bigger deals in the years to come. This is because the telco’s main aim is to spread its wireless network and win back small business. Moreover, Fiber plays a major role in the 5G push and has implications for enterprise and SMB (small business segment) penetration.
However, the Verizon-Yahoo! Inc. deal (for $4.83 billion) seems to be on hold due to Yahoo’s data breach reports.Moreover, a saturated and competitive wireless market, expenses related to promotions and discounts, a competitive cable TV market and persistent losses in access lines are likely to affect the company’s upcoming quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Verizon is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Verizon has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Verizon has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Verizon Communications Inc. Price and EPS Surprise
BlackBerry’s earnings surpassed the Zacks Consensus Estimate in all the previous four quarters, with an average beat of 62.50%.
Microsoft Corp. (MSFT - Free Report) , with an earnings ESP of +1.28% and a Zacks Rank #2. BlackBerry’s earnings surpassed the Zacks Consensus Estimate in three the previous four quarters, with an average beat of 10.55%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Can Verizon (VZ) Pull Off a Surprise This Earnings Season?
U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) is slated to report fourth-quarter 2016 results, before the opening bell on Jan 24.
Last quarter, Verizon posted an earnings surprise of 2.02%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 1.06%.
We note that Verizon have underperformed the Zacks categorized Wireless National industry’s growth over the past three months. The stock added 4.68% compared with the industry’s gain of 6.13% over the time span.
Let’s see how things are shaping up for this announcement.
Factors at Play
We are impressed with Verizon’s plans of diversifying its business model. Upcoming 5G wireless network, diversification into digital ad and content market, deployment of high-speed fiber network and forging into IoT space are long-term growth prospects for the company. The LQD WiFi LLC buyout (a New York-based firm specializing in IoT technology) and ‘IoT Fast Track’ services (to small business owners) are likely to boost Verizon’s IoT prospects.
FCC approval for XO Comm. buyout, license to install FiOS in Boston along with small cell densification and expansion of dark fiber hint at Verizon’s steps in the fiber space. The densification of cell network will help the company to install and build its upcoming 5G network.
Notably, this is just the beginning of fiber rollout on Verizon’s part and we hope to see many bigger deals in the years to come. This is because the telco’s main aim is to spread its wireless network and win back small business. Moreover, Fiber plays a major role in the 5G push and has implications for enterprise and SMB (small business segment) penetration.
However, the Verizon-Yahoo! Inc. deal (for $4.83 billion) seems to be on hold due to Yahoo’s data breach reports.Moreover, a saturated and competitive wireless market, expenses related to promotions and discounts, a competitive cable TV market and persistent losses in access lines are likely to affect the company’s upcoming quarterly results.
Earnings Whispers
Our proven model does not conclusively show that Verizon is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Verizon has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Verizon has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Verizon Communications Inc. Price and EPS Surprise
Verizon Communications Inc. Price and EPS Surprise | Verizon Communications Inc. Quote
Key Picks
Here are some companies that have the right combination of elements to post an earnings beat this quarter.
BlackBerry Ltd. , with an earnings ESP of +50.00% and a Zacks Rank #2. %. You can see the complete list of today’s Zacks #1 Rank stocks here.
BlackBerry’s earnings surpassed the Zacks Consensus Estimate in all the previous four quarters, with an average beat of 62.50%.
Microsoft Corp. (MSFT - Free Report) , with an earnings ESP of +1.28% and a Zacks Rank #2. BlackBerry’s earnings surpassed the Zacks Consensus Estimate in three the previous four quarters, with an average beat of 10.55%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>