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Will Revenue Contraction Dent Verizon's (VZ) Q4 Earnings?
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Verizon Communications Inc. (VZ - Free Report) is scheduled to report fourth-quarter 2023 results before the opening bell on Jan 23. In the last reported quarter, the telecom giant beat the Zacks Consensus Estimate by 5 cents.
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 fourth quarter, Verizon continued to capitalize on the full availability of 160 MHz of 5G C-band spectrum, which nearly tripled its 5G bandwidth connectivity, to expand and enhance its 5G Ultra Wideband network.
The company collaborated with Axon Enterprise Inc., a leader in public safety technology, to showcase 5G network slicing capabilities in public safety applications. 5G with network slicing capability utilizes a virtualized network to tailor its performance to diverse use cases, optimizing network performance, driving cost efficiency and improving revenue potential. These are likely to be reflected in the upcoming quarterly results.
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. In addition to various bundle plans for varied streaming services, Verizon offers customers greater control and flexibility over their preferred content selections, allowing them to pay only for what they want.
Although this is likely to have translated into healthy customer additions, revenues from the Consumer segment are likely to have taken a toll with higher promotional expenses. Our estimate for revenues from the Consumer segment is pegged at $26,134 million, down from $26,770 recorded in fourth-quarter 2022.
In the quarter, Verizon joined forces with Zebra Technologies to launch specialized Zebra mobile devices and software solutions tailored for Verizon Private 5G users. Tablets and computers developed by Zebra are specifically designed for frontline workers across industries like transportation, retail and manufacturing. The devices are equipped with Zebra Mobility DNA software, which facilitates inventory tracking, project management and seamless communication in various work environments.
The collaboration aims to streamline the adoption and implementation of these devices and provide businesses with quicker access to tools essential for leveraging their private networks effectively. This is likely to have translated into incremental revenues in the quarter. Our estimate for revenues from the Business segment is pegged at $7,876 million, marginally down from $7,900 million a year ago.
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 Intelligent Edge Network architecture upgrades.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $34,819 million. It reported revenues of $35,251 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.07, which suggests a decline from the year-ago tally of $1.19.
Earnings Whispers
Our proven model does not predict 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.54%. 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 Silicon Motion Technology Corporation (SIMO - Free Report) is +4.92% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 6.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +4.58% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
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Will Revenue Contraction Dent Verizon's (VZ) Q4 Earnings?
Verizon Communications Inc. (VZ - Free Report) is scheduled to report fourth-quarter 2023 results before the opening bell on Jan 23. In the last reported quarter, the telecom giant beat the Zacks Consensus Estimate by 5 cents.
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 fourth quarter, Verizon continued to capitalize on the full availability of 160 MHz of 5G C-band spectrum, which nearly tripled its 5G bandwidth connectivity, to expand and enhance its 5G Ultra Wideband network.
The company collaborated with Axon Enterprise Inc., a leader in public safety technology, to showcase 5G network slicing capabilities in public safety applications. 5G with network slicing capability utilizes a virtualized network to tailor its performance to diverse use cases, optimizing network performance, driving cost efficiency and improving revenue potential. These are likely to be reflected in the upcoming quarterly results.
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. In addition to various bundle plans for varied streaming services, Verizon offers customers greater control and flexibility over their preferred content selections, allowing them to pay only for what they want.
Although this is likely to have translated into healthy customer additions, revenues from the Consumer segment are likely to have taken a toll with higher promotional expenses. Our estimate for revenues from the Consumer segment is pegged at $26,134 million, down from $26,770 recorded in fourth-quarter 2022.
In the quarter, Verizon joined forces with Zebra Technologies to launch specialized Zebra mobile devices and software solutions tailored for Verizon Private 5G users. Tablets and computers developed by Zebra are specifically designed for frontline workers across industries like transportation, retail and manufacturing. The devices are equipped with Zebra Mobility DNA software, which facilitates inventory tracking, project management and seamless communication in various work environments.
The collaboration aims to streamline the adoption and implementation of these devices and provide businesses with quicker access to tools essential for leveraging their private networks effectively. This is likely to have translated into incremental revenues in the quarter. Our estimate for revenues from the Business segment is pegged at $7,876 million, marginally down from $7,900 million a year ago.
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 Intelligent Edge Network architecture upgrades.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $34,819 million. It reported revenues of $35,251 million in the year-ago quarter. The consensus estimate for adjusted earnings per share stands at $1.07, which suggests a decline from the year-ago tally of $1.19.
Earnings Whispers
Our proven model does not predict 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.54%. 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:
Qualcomm Incorporated (QCOM - Free Report) is set to release quarterly numbers on Jan 31. It has an Earnings ESP of +3.45% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation (SIMO - Free Report) is +4.92% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 6.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +4.58% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.