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Healthy Wireless Revenues to Aid Verizon (VZ) Q4 Earnings
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Verizon Communications Inc. (VZ - Free Report) is scheduled to release fourth-quarter 2018 results before the opening bell on Jan 29. The company is likely to witness solid year-over-year revenues from the Wireless segment, which accounts for the lion’s share of total revenues.
Whether this will benefit its bottom line remains to be seen.
Key Factors
During the quarter, Verizon continued its healthy momentum in the wireless business by optimizing growth opportunities in the upcoming 5G era while thwarting competition with innovative products and services. Notably, the company launched the world’s first commercial 5G service — Verizon 5G Home — in parts of Houston, Indianapolis, Los Angeles and Sacramento to give customers the first taste of commercial 5G network.
Verizon 5G Home service is built on the world’s first and only 5G Ultra Wideband Network, offering typical network speeds around 300 Mbps and peak speeds of nearly 1 Gbps with no data caps. It combines end-to-end fiber network with a large deployment of small cells for improved connectivity and millimeter wave bandwidth to realize the full 5G potential for capacity, throughput and latency. Management remains bullish on the industry's ability to grow revenues through greater penetration of smartphones and cloud computing as it remains confident that 2019 will bring more innovations and opportunities for its customers.
Over the years, the largest U.S. wireless carrier by subscribers, has spurred technological innovation and economic development, including introduction of mobile data and making the ecosystem more pervasive with 4G LTE. The telecom behemoth continues to deploy the latest 4G LTE advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investments. Backed by these initiatives, Verizon has reportedly generated 1.2 million retail postpaid net additions in the quarter with phone churn rate of 0.82%, indicating continued strong customer loyalty.
The acquisition of PrecisionAccess solution and other Software Defined Perimeter (SDP)-related assets from privately held Vidder, Inc., will further help Verizon to create a virtual network boundary to thwart any potential cyberattack. Verizon has integrated Vidder’s advanced technology within its SDP service to enable organizations protect application infrastructure against cyber threats. This is achieved by blocking connectivity from unknown devices and making protected devices invisible to anyone without approved access. This approach of pre-authenticated secure access to enterprise applications helps to reduce the security risks associated with the multiple endpoints of an increasingly digital, mobile and virtual business world. The acquisition is likely to augment Verizon’s leading position in the market and ensure a healthy revenue stream with a significant boost in its client base.
Buoyed by such tailwinds, the Zacks Consensus Estimate for operating revenues in the Wireless segment in the to-be-reported quarter is currently pegged at $24,614 million. Notably, it reported revenues of $23,771 million in the year-ago quarter. The higher revenue expectations can be attributed to an uptick in demand and an upgrade to state-of-the-art infrastructure.
Our proven model does not conclusively show that Verizon is likely to beat earnings in the fourth quarter as it does not possess the key components. 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. This is not the case here as you will see below:
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.09% with the former pegged at $1.07 and the latter at $1.09. 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
Zacks Rank: Verizon has a Zacks Rank #2. Although this increases the predictive power of our model, we need to have a positive ESP to make us reasonably confident of an earnings beat.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AT&T Inc. (T - Free Report) is slated to release quarterly numbers on Jan 30. It has an Earnings ESP of +1.39% and a Zacks Rank #3.
The Earnings ESP for Arista Networks, Inc. (ANET - Free Report) is +2.72% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 14.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Healthy Wireless Revenues to Aid Verizon (VZ) Q4 Earnings
Verizon Communications Inc. (VZ - Free Report) is scheduled to release fourth-quarter 2018 results before the opening bell on Jan 29. The company is likely to witness solid year-over-year revenues from the Wireless segment, which accounts for the lion’s share of total revenues.
Whether this will benefit its bottom line remains to be seen.
Key Factors
During the quarter, Verizon continued its healthy momentum in the wireless business by optimizing growth opportunities in the upcoming 5G era while thwarting competition with innovative products and services. Notably, the company launched the world’s first commercial 5G service — Verizon 5G Home — in parts of Houston, Indianapolis, Los Angeles and Sacramento to give customers the first taste of commercial 5G network.
Verizon 5G Home service is built on the world’s first and only 5G Ultra Wideband Network, offering typical network speeds around 300 Mbps and peak speeds of nearly 1 Gbps with no data caps. It combines end-to-end fiber network with a large deployment of small cells for improved connectivity and millimeter wave bandwidth to realize the full 5G potential for capacity, throughput and latency. Management remains bullish on the industry's ability to grow revenues through greater penetration of smartphones and cloud computing as it remains confident that 2019 will bring more innovations and opportunities for its customers.
Over the years, the largest U.S. wireless carrier by subscribers, has spurred technological innovation and economic development, including introduction of mobile data and making the ecosystem more pervasive with 4G LTE. The telecom behemoth continues to deploy the latest 4G LTE advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investments. Backed by these initiatives, Verizon has reportedly generated 1.2 million retail postpaid net additions in the quarter with phone churn rate of 0.82%, indicating continued strong customer loyalty.
The acquisition of PrecisionAccess solution and other Software Defined Perimeter (SDP)-related assets from privately held Vidder, Inc., will further help Verizon to create a virtual network boundary to thwart any potential cyberattack. Verizon has integrated Vidder’s advanced technology within its SDP service to enable organizations protect application infrastructure against cyber threats. This is achieved by blocking connectivity from unknown devices and making protected devices invisible to anyone without approved access. This approach of pre-authenticated secure access to enterprise applications helps to reduce the security risks associated with the multiple endpoints of an increasingly digital, mobile and virtual business world. The acquisition is likely to augment Verizon’s leading position in the market and ensure a healthy revenue stream with a significant boost in its client base.
Buoyed by such tailwinds, the Zacks Consensus Estimate for operating revenues in the Wireless segment in the to-be-reported quarter is currently pegged at $24,614 million. Notably, it reported revenues of $23,771 million in the year-ago quarter. The higher revenue expectations can be attributed to an uptick in demand and an upgrade to state-of-the-art infrastructure.
Overall Expectations
Total revenues for the company are expected to be $34,321 million. It generated revenues of $33,955 million in the prior-year quarter. (Read More: Can Solid Wireless Traction Buoy Verizon Q4 Earnings?)
Our proven model does not conclusively show that Verizon is likely to beat earnings in the fourth quarter as it does not possess the key components. 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. This is not the case here as you will see below:
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.09% with the former pegged at $1.07 and the latter at $1.09. 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 and EPS Surprise | Verizon Communications Inc. Quote
Zacks Rank: Verizon has a Zacks Rank #2. Although this increases the predictive power of our model, we need to have a positive ESP to make us reasonably confident of an earnings beat.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AT&T Inc. (T - Free Report) is slated to release quarterly numbers on Jan 30. It has an Earnings ESP of +1.39% and a Zacks Rank #3.
Motorola Solutions, Inc. (MSI - Free Report) is scheduled to release results on Feb 7. The company has an Earnings ESP of +1.73% and has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Arista Networks, Inc. (ANET - Free Report) is +2.72% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 14.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>