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Can Marginal Revenue Growth Buoy Verizon (VZ) Q1 Earnings?
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Verizon Communications Inc. (VZ - Free Report) is scheduled to report first-quarter 2023 results before the opening bell on Apr 25. In the last reported quarter, the telecom giant missed the Zacks Consensus Estimate by a penny. The company is expected to have recorded higher aggregate revenues year over year, buoyed by the positive momentum in its core wireless business.
Factors at Play
During the first quarter, Verizon expanded its 5G coverage and covered more than 200 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. These are likely to get reflected in the upcoming quarterly results.
In first-quarter 2023, Verizon introduced a 30-day free trial offer for unlimited data on its 5G network. The offer is applicable on any 5G compatible, unlocked eSIM-capable smartphone without disrupting the existing plan. The promotional offer, aimed primarily at non-Verizon customers, is likely to have enticed users who would prefer to enjoy the premium 5G network experience without any contractual obligations. The company expects that its superfast network will likely attract and retain several new customers and augment its user base through lucrative mix-and-match unlimited plans. Verizon is offering various mix-and-match pricing in both wireless and home broadband plans that have historically led to increased adoption of 5G devices and premium unlimited plans, translating into healthy customer additions.
During the quarter, Verizon introduced two new asset prototypes – Mobile Connectivity Agile Vehicle and Rapid Response Connectivity Unit – designed to facilitate the rapid establishment of communications capabilities in hostile environments and support public safety agencies. These assets are the latest addition to Verizon Frontline, equipped with cutting-edge network and technological capabilities and designed to address the diverse demands of first responders nationwide. These initiatives are likely to have translated into incremental revenues in the quarter.
However, adverse foreign currency translations, infrastructure investments and high operating costs for 5G deployments are likely to have led to soft margins in the quarter. Moreover, promotional offers and lucrative discounts are expected to have weighed on margins. In addition, the company’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from the voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data and video) offerings by cable companies. Verizon also recorded high capital expenditures for the launch and continued build-out of its 5G Ultra-Wideband network, deployment of significant fiber assets across the country and upgraded to Intelligent Edge Network architecture.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $33,709 million. It reported revenues of $33,554 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.19, which suggests a decline from the year-ago tally of $1.35.
Key Developments in Q1
During the quarter, Verizon secured a $2.4 billion Federal Aviation Administration Enterprise Network (FENS) contract to modernize FAA’s (Federal Aviation Administration) existing telecommunication infrastructure. Per the 15-year deal, Verizon will design, deploy and maintain next-generation robust network functionalities that will ensure smooth digital transformation and improve the operational excellence and management of the national airspace system. It will offer high bandwidth connectivity, network security management and enhanced network engineering.
Additionally, dynamic services provisioning combined with more significant insights and visibility of overall network operation will enable better configuration management according to situational requirements. Successful deployment of the capabilities will streamline aviation operations, improve productivity and ensure a better consumer experience.
Earnings Whispers
Our proven model predicts an earnings beat for Verizon for the first 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 +0.63%, with the former pegged at $1.20 and the latter at $1.19. 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 Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +7.78% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
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Can Marginal Revenue Growth Buoy Verizon (VZ) Q1 Earnings?
Verizon Communications Inc. (VZ - Free Report) is scheduled to report first-quarter 2023 results before the opening bell on Apr 25. In the last reported quarter, the telecom giant missed the Zacks Consensus Estimate by a penny. The company is expected to have recorded higher aggregate revenues year over year, buoyed by the positive momentum in its core wireless business.
Factors at Play
During the first quarter, Verizon expanded its 5G coverage and covered more than 200 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. These are likely to get reflected in the upcoming quarterly results.
In first-quarter 2023, Verizon introduced a 30-day free trial offer for unlimited data on its 5G network. The offer is applicable on any 5G compatible, unlocked eSIM-capable smartphone without disrupting the existing plan. The promotional offer, aimed primarily at non-Verizon customers, is likely to have enticed users who would prefer to enjoy the premium 5G network experience without any contractual obligations. The company expects that its superfast network will likely attract and retain several new customers and augment its user base through lucrative mix-and-match unlimited plans. Verizon is offering various mix-and-match pricing in both wireless and home broadband plans that have historically led to increased adoption of 5G devices and premium unlimited plans, translating into healthy customer additions.
During the quarter, Verizon introduced two new asset prototypes – Mobile Connectivity Agile Vehicle and Rapid Response Connectivity Unit – designed to facilitate the rapid establishment of communications capabilities in hostile environments and support public safety agencies. These assets are the latest addition to Verizon Frontline, equipped with cutting-edge network and technological capabilities and designed to address the diverse demands of first responders nationwide. These initiatives are likely to have translated into incremental revenues in the quarter.
However, adverse foreign currency translations, infrastructure investments and high operating costs for 5G deployments are likely to have led to soft margins in the quarter. Moreover, promotional offers and lucrative discounts are expected to have weighed on margins. In addition, the company’s wireline division is struggling with persistent losses in access lines owing to competitive pressure from the voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data and video) offerings by cable companies. Verizon also recorded high capital expenditures for the launch and continued build-out of its 5G Ultra-Wideband network, deployment of significant fiber assets across the country and upgraded to Intelligent Edge Network architecture.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $33,709 million. It reported revenues of $33,554 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.19, which suggests a decline from the year-ago tally of $1.35.
Key Developments in Q1
During the quarter, Verizon secured a $2.4 billion Federal Aviation Administration Enterprise Network (FENS) contract to modernize FAA’s (Federal Aviation Administration) existing telecommunication infrastructure. Per the 15-year deal, Verizon will design, deploy and maintain next-generation robust network functionalities that will ensure smooth digital transformation and improve the operational excellence and management of the national airspace system. It will offer high bandwidth connectivity, network security management and enhanced network engineering.
Additionally, dynamic services provisioning combined with more significant insights and visibility of overall network operation will enable better configuration management according to situational requirements. Successful deployment of the capabilities will streamline aviation operations, improve productivity and ensure a better consumer experience.
Earnings Whispers
Our proven model predicts an earnings beat for Verizon for the first 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 +0.63%, with the former pegged at $1.20 and the latter at $1.19. 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:
T-Mobile US, Inc. (TMUS - Free Report) is set to release quarterly numbers on Apr 26. It has an Earnings ESP of +5.54% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +7.78% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.