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Will Revenue Contraction Dent Verizon (VZ) Earnings in Q2?
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Verizon Communications Inc. (VZ - Free Report) is scheduled to report second-quarter 2023 results before the opening bell on Jul 25. In the last reported quarter, the telecom giant beat the Zacks Consensus Estimate by a penny. The company is expected to have recorded lower aggregate revenues year over year, despite healthy momentum in the core wireless business, owing to a challenging macroeconomic environment.
Factors at Play
During the second quarter, Verizon expanded its 5G coverage by deploying 5G Ultra Wideband service across various cities. Powered by the C-band spectrum, this 5G network service is expected to cater to the exponential growth of video demand. 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 the quarter, Verizon unveiled an exclusive promotional offer through myPlan +play perk. This included Netflix Premium Plan and Paramount+ offered together with the SHOWTIME bundle for Verizon customers. Verizon +play gives access to a wide range of subscriptions under a single platform that simplifies the process for end users and grants them enhanced control and flexibility in selecting and paying for their preferred content. The company is offering various mix-and-match pricing in wireless and home broadband plans that have historically led to increased adoption of 5G devices and premium unlimited plans.
Although this is likely to have translated into healthy customer additions, revenues from the Consumer segment are likely to have taken a toll. Our estimate for revenues from the Consumer segment is pegged at $23,891 million.
During the quarter, Verizon announced the launch of a new Verizon Connect Equipment Asset Tracker (EAT) to support organizations with efficient resource utilization during field operations. Verizon Connect, an industry-leading fleet management technology provider, also unveiled new updates for mobile workforce management platforms that will enable centralized asset tracking and monitoring in accordance with user-specific requirements.
Verizon also introduced a cloud-based router management dashboard, coupled with advanced security features, to empower businesses of all sizes to address their performance, security and visibility needs from a centralized location. It offered these solutions as simple-to-add enhancements to its fixed-wireless plans, eliminating the need for special equipment or in-house IT support. These initiatives are likely to have translated into incremental revenues in the quarter. Our estimate for revenues from the Business segment is pegged at $23,891 million.
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, the 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 June quarter, the Zacks Consensus Estimate for revenues is pegged at $33,435 million. It reported revenues of $33,789 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.17, which suggests a decline from the year-ago tally of $1.31.
Key Developments in Q2
During the quarter, Verizon secured a $2.4 billion Federal Aviation Administration Enterprise Network 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 does not predict an earnings beat for Verizon for the second 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.95%, with the former pegged at $1.16 and the latter at $1.17. 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 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 +11.77% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.56% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
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Will Revenue Contraction Dent Verizon (VZ) Earnings in Q2?
Verizon Communications Inc. (VZ - Free Report) is scheduled to report second-quarter 2023 results before the opening bell on Jul 25. In the last reported quarter, the telecom giant beat the Zacks Consensus Estimate by a penny. The company is expected to have recorded lower aggregate revenues year over year, despite healthy momentum in the core wireless business, owing to a challenging macroeconomic environment.
Factors at Play
During the second quarter, Verizon expanded its 5G coverage by deploying 5G Ultra Wideband service across various cities. Powered by the C-band spectrum, this 5G network service is expected to cater to the exponential growth of video demand. 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 the quarter, Verizon unveiled an exclusive promotional offer through myPlan +play perk. This included Netflix Premium Plan and Paramount+ offered together with the SHOWTIME bundle for Verizon customers. Verizon +play gives access to a wide range of subscriptions under a single platform that simplifies the process for end users and grants them enhanced control and flexibility in selecting and paying for their preferred content. The company is offering various mix-and-match pricing in wireless and home broadband plans that have historically led to increased adoption of 5G devices and premium unlimited plans.
Although this is likely to have translated into healthy customer additions, revenues from the Consumer segment are likely to have taken a toll. Our estimate for revenues from the Consumer segment is pegged at $23,891 million.
During the quarter, Verizon announced the launch of a new Verizon Connect Equipment Asset Tracker (EAT) to support organizations with efficient resource utilization during field operations. Verizon Connect, an industry-leading fleet management technology provider, also unveiled new updates for mobile workforce management platforms that will enable centralized asset tracking and monitoring in accordance with user-specific requirements.
Verizon also introduced a cloud-based router management dashboard, coupled with advanced security features, to empower businesses of all sizes to address their performance, security and visibility needs from a centralized location. It offered these solutions as simple-to-add enhancements to its fixed-wireless plans, eliminating the need for special equipment or in-house IT support. These initiatives are likely to have translated into incremental revenues in the quarter. Our estimate for revenues from the Business segment is pegged at $23,891 million.
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, the 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 June quarter, the Zacks Consensus Estimate for revenues is pegged at $33,435 million. It reported revenues of $33,789 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.17, which suggests a decline from the year-ago tally of $1.31.
Key Developments in Q2
During the quarter, Verizon secured a $2.4 billion Federal Aviation Administration Enterprise Network 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 does not predict an earnings beat for Verizon for the second 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.95%, with the former pegged at $1.16 and the latter at $1.17. 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.
Stocks to Consider
Here are some 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:
Intel Corporation (INTC - Free Report) is set to release quarterly numbers on Jul 27. It has an Earnings ESP of +21.05% 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 +11.77% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.56% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.