We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Lower Consumer Revenues Hurt Verizon's (VZ) Q4 Earnings?
Read MoreHide Full Article
Verizon Communications Inc. (VZ - Free Report) is scheduled to report fourth-quarter 2023 results before the opening bell on Jan 23. In the quarter, the Consumer segment is likely to have recorded year-over-year lower revenues despite a healthy momentum in the wireless business, owing to a challenging macroeconomic environment.
Factors at Play
The Consumer segment includes the retail wireline and wireless businesses.
Verizon continued to capitalize on the full availability of 160 MHz of 5G C-band spectrum, which nearly tripled its 5G bandwidth connectivity. This helped the company to expand and enhance its 5G Ultra Wideband network, offering greater capacity to accommodate more customers with robust services and higher data speeds. The ongoing expansion is part of Verizon’s massive multi-year network transformation plan, bringing 5G service to more than 230 million people and 5G Home Internet service to more than 40 million households.
Further, the upgraded infrastructure facilities have added more capabilities while paving the way for personalized customer experiences and offering a platform for enterprises and developers to drive innovation. The additional spectrum also enabled Verizon to offer 5G Home broadband and Business Internet services to more customers. These are likely to be reflected in the upcoming quarterly results.
During the quarter, Verizon also continued with its aggressive fiber densification strategy that helped deploy nearly 57,000 fiber miles since 2020, connecting more than 51% of its cell sites with its own fiber. In addition to improved broadband experience for consumers and enterprises, it serves as the backbone of the wireless network.
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. With more than 30 partners onboard, it empowers customers to customize their viewing experiences across different categories such as sports, entertainment, education and more.
The introduction of new services within myPlan combined with premium network connectivity is fostering brand loyalty among its existing customer base and building the foundation for future commercial expansion. 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. Our estimate for operating income from the segment stands at $7,354 million, suggesting a rise from $7,028 million.
Adverse foreign currency translations and high operating costs are likely to have led to soft margins in the fourth quarter. Verizon is also expected to have 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 upgrade to Intelligent Edge Network architecture.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Due to challenging macroeconomic conditions and high inflationary pressures, several customers are likely to have faltered on their monthly bill payments, further affecting VZ’s quarterly performance.
Overall Expectations
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.
Image: Bigstock
Will Lower Consumer Revenues Hurt 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 quarter, the Consumer segment is likely to have recorded year-over-year lower revenues despite a healthy momentum in the wireless business, owing to a challenging macroeconomic environment.
Factors at Play
The Consumer segment includes the retail wireline and wireless businesses.
Verizon continued to capitalize on the full availability of 160 MHz of 5G C-band spectrum, which nearly tripled its 5G bandwidth connectivity. This helped the company to expand and enhance its 5G Ultra Wideband network, offering greater capacity to accommodate more customers with robust services and higher data speeds. The ongoing expansion is part of Verizon’s massive multi-year network transformation plan, bringing 5G service to more than 230 million people and 5G Home Internet service to more than 40 million households.
Further, the upgraded infrastructure facilities have added more capabilities while paving the way for personalized customer experiences and offering a platform for enterprises and developers to drive innovation. The additional spectrum also enabled Verizon to offer 5G Home broadband and Business Internet services to more customers. These are likely to be reflected in the upcoming quarterly results.
During the quarter, Verizon also continued with its aggressive fiber densification strategy that helped deploy nearly 57,000 fiber miles since 2020, connecting more than 51% of its cell sites with its own fiber. In addition to improved broadband experience for consumers and enterprises, it serves as the backbone of the wireless network.
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. With more than 30 partners onboard, it empowers customers to customize their viewing experiences across different categories such as sports, entertainment, education and more.
The introduction of new services within myPlan combined with premium network connectivity is fostering brand loyalty among its existing customer base and building the foundation for future commercial expansion. 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. Our estimate for operating income from the segment stands at $7,354 million, suggesting a rise from $7,028 million.
Adverse foreign currency translations and high operating costs are likely to have led to soft margins in the fourth quarter. Verizon is also expected to have 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 upgrade to Intelligent Edge Network architecture.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Due to challenging macroeconomic conditions and high inflationary pressures, several customers are likely to have faltered on their monthly bill payments, further affecting VZ’s quarterly performance.
Overall Expectations
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.