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Verizon (VZ) Beats Q2 Earnings on Healthy Top-Line Growth
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Verizon Communications Inc. (VZ - Free Report) continued its solid performance in second-quarter 2018, primarily led by the wireless business. The company recorded healthy top-line growth led by solid service revenues. The bottom line also benefited from significant savings from the tax reform.
Quarter Details
GAAP earnings for the reported quarter were $4,246 million or $1.00 per share compared with $4,478 million or $1.07 per share in the year-ago quarter. The year-over-year decrease in GAAP earnings despite higher revenues was largely attributable to higher operating expenses. Excluding non-recurring items, adjusted earnings were $1.20 per share compared with 96 cents in the year-earlier quarter and comfortably exceeded the Zacks Consensus Estimate of $1.14.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Consolidated GAAP revenues increased 5.4% year over year to $32,203 million on the back of a solid performance in the wireless business and exceeded the Zacks Consensus Estimate of $31,718 million. Operating income declined 17.4% year over year to $6,617 million on higher operating expenses.
Segment Performance: Wireless
Total revenues from this segment were $22,449 million, up 5.5% year over year. While service revenues improved 0.8% to $15,754 million, that from equipment increased 17.4% to $5,044 million. Other revenues totaled $1,651 million, up 21.2% year over year.
Operating income improved 11.7% to $8,274 million due to higher retail postpaid connections. Quarterly operating income margin was 36.9% compared with 34.8% in the year-ago quarter. Segment EBITDA increased 10% to $10,733 million, resulting in EBITDA margin of 47.8% compared with respective tallies of $9,757 million and 45.8% in the prior-year quarter.
Verizon reported a net increase of 531,000 retail postpaid connections in second-quarter 2018. Quarterly retail postpaid churn rate marginally increased to 0.97% from 0.94% in the year-ago quarter. Retail postpaid ARPA (average revenue per account) was $134.56 compared with $134.89 in the year-ago quarter.
Wireline Segment
Total revenues in the segment were $7,459 million, down 3.4% year over year owing to lower Business Markets revenues (down 7.4% to $850 million) and Enterprise Solutions (down 4.2% to $2,211 million). Partner Solutions revenues also decreased 2.8% to $1,200 million, while Consumer retail revenues declined 1.6% to $3,132 million. Other revenues were down 9.6% to $66 million.
Although Verizon added a net of 43,000 Fios Internet connections due to strong demand for value broadband connections, it lost 37,000 Fios Video connections amid pressures from cord-cutting of video bundles.
Quarterly operating loss was $19 million, against operating income of $47 million in the year-ago quarter. Segment EBITDA fell 5.6% to $1,505 million for EBITDA margin of 20.2% compared with 20.7% in the year-ago quarter.
Cash Flow and Liquidity
Verizon generated $16,433 million of cash from operating activities for the first six months of 2018 compared with $9,306 million in the year-ago period. At the end of the reported quarter, Verizon had $1,750 million of cash and cash equivalents and $109,174 million in long-term debts.
Outlook Reiterated
For full-year 2018, Verizon reiterated its earlier guidance and continues to expect both GAAP revenues and adjusted earnings per share to increase by low single-digit percentage rates driven by expected savings from tax reform and higher cash flow from operations. Capital expenditures for 2018 are likely to be in the range of $17.0 billion to $17.8 billion.
We remain impressed with the healthy second-quarter results and bullish outlook of this Zacks Rank #3 (Hold) stock. Better-ranked stocks in the broader industry include Comtech Telecommunications Corp. (CMTL - Free Report) , sporting Zacks Rank #1 (Strong Buy), and AT&T Inc. (T - Free Report) and Windstream Holdings, Inc. , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications has a long-term earnings growth expectation of 5%. It delivered an average positive earnings surprise of 123.7% in the trailing four quarters, beating estimates in each.
AT&T has a long-term earnings growth expectation of 3.4%. It delivered an average positive earnings surprise of 5.8% in the trailing four quarters, beating estimates twice.
Windstream delivered an average positive earnings surprise of 23.9% in the trailing four quarters, beating estimates twice.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Verizon (VZ) Beats Q2 Earnings on Healthy Top-Line Growth
Verizon Communications Inc. (VZ - Free Report) continued its solid performance in second-quarter 2018, primarily led by the wireless business. The company recorded healthy top-line growth led by solid service revenues. The bottom line also benefited from significant savings from the tax reform.
Quarter Details
GAAP earnings for the reported quarter were $4,246 million or $1.00 per share compared with $4,478 million or $1.07 per share in the year-ago quarter. The year-over-year decrease in GAAP earnings despite higher revenues was largely attributable to higher operating expenses. Excluding non-recurring items, adjusted earnings were $1.20 per share compared with 96 cents in the year-earlier quarter and comfortably exceeded the Zacks Consensus Estimate of $1.14.
Verizon Communications Inc. Price, Consensus and EPS Surprise
Verizon Communications Inc. Price, Consensus and EPS Surprise | Verizon Communications Inc. Quote
Consolidated GAAP revenues increased 5.4% year over year to $32,203 million on the back of a solid performance in the wireless business and exceeded the Zacks Consensus Estimate of $31,718 million. Operating income declined 17.4% year over year to $6,617 million on higher operating expenses.
Segment Performance: Wireless
Total revenues from this segment were $22,449 million, up 5.5% year over year. While service revenues improved 0.8% to $15,754 million, that from equipment increased 17.4% to $5,044 million. Other revenues totaled $1,651 million, up 21.2% year over year.
Operating income improved 11.7% to $8,274 million due to higher retail postpaid connections. Quarterly operating income margin was 36.9% compared with 34.8% in the year-ago quarter. Segment EBITDA increased 10% to $10,733 million, resulting in EBITDA margin of 47.8% compared with respective tallies of $9,757 million and 45.8% in the prior-year quarter.
Verizon reported a net increase of 531,000 retail postpaid connections in second-quarter 2018. Quarterly retail postpaid churn rate marginally increased to 0.97% from 0.94% in the year-ago quarter. Retail postpaid ARPA (average revenue per account) was $134.56 compared with $134.89 in the year-ago quarter.
Wireline Segment
Total revenues in the segment were $7,459 million, down 3.4% year over year owing to lower Business Markets revenues (down 7.4% to $850 million) and Enterprise Solutions (down 4.2% to $2,211 million). Partner Solutions revenues also decreased 2.8% to $1,200 million, while Consumer retail revenues declined 1.6% to $3,132 million. Other revenues were down 9.6% to $66 million.
Although Verizon added a net of 43,000 Fios Internet connections due to strong demand for value broadband connections, it lost 37,000 Fios Video connections amid pressures from cord-cutting of video bundles.
Quarterly operating loss was $19 million, against operating income of $47 million in the year-ago quarter. Segment EBITDA fell 5.6% to $1,505 million for EBITDA margin of 20.2% compared with 20.7% in the year-ago quarter.
Cash Flow and Liquidity
Verizon generated $16,433 million of cash from operating activities for the first six months of 2018 compared with $9,306 million in the year-ago period. At the end of the reported quarter, Verizon had $1,750 million of cash and cash equivalents and $109,174 million in long-term debts.
Outlook Reiterated
For full-year 2018, Verizon reiterated its earlier guidance and continues to expect both GAAP revenues and adjusted earnings per share to increase by low single-digit percentage rates driven by expected savings from tax reform and higher cash flow from operations. Capital expenditures for 2018 are likely to be in the range of $17.0 billion to $17.8 billion.
We remain impressed with the healthy second-quarter results and bullish outlook of this Zacks Rank #3 (Hold) stock. Better-ranked stocks in the broader industry include Comtech Telecommunications Corp. (CMTL - Free Report) , sporting Zacks Rank #1 (Strong Buy), and AT&T Inc. (T - Free Report) and Windstream Holdings, Inc. , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications has a long-term earnings growth expectation of 5%. It delivered an average positive earnings surprise of 123.7% in the trailing four quarters, beating estimates in each.
AT&T has a long-term earnings growth expectation of 3.4%. It delivered an average positive earnings surprise of 5.8% in the trailing four quarters, beating estimates twice.
Windstream delivered an average positive earnings surprise of 23.9% in the trailing four quarters, beating estimates twice.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>