In an effort to enhance its customers’ network experience, Verizon Communications Inc. (VZ - Free Report) has made significant investments in its networks across California, Washington and Oregon, over the past few years.
As a matter of fact, since 2015, the company has invested more than $5 billion in California to cater to and exceed the increasing network requirements of its customers. Also, during the same time period, it made an investment of more than $878 million in Washington. This will enable the company meet customer network requirements in the area. This apart, during the same time period, it invested above $512 million in Oregon for customers’ growing network requirements in the state.
Of late, the company has been investing significantly in its networks as well as deploying innovative technology solutions. Some of these advanced technology solutions include the 4x4 MIMO antenna technology, 256 QAM and carrier aggregation among others. Notably, the combination of technologies like 4x4 MIMO, 256 QAM and carrier aggregation will drive the company’s LTE Advanced network. This will help in boosting wireless speeds and capacity.
Existing Business Scenario
Verizon anticipates considerable business growth in both its Wireless and Wireline businesses. The company expects healthy improvement in margins on the back of the expected savings from tax reform as well as continued strong FiOS fiber-optic network and strategic services in the Wireline business. Its efforts to boost growth include improving operating and capital efficiency. Also, the company is looking forward to capitalizing on the countless innovative technology solutions being developed in the Internet of Things and telematics ecosystem across multiple industries. Further, the company’s current focus on online content delivery, mobile video and online advertising should drive growth.
Moreover, Verizon has been forging ahead to expand its fiber optics networks to support 4G LTE and upcoming 5G wireless standards as well as wireline connections. Moreover, it has an attractive fundamental outlook based on increasingly favorable growth prospects for Wireless business and the possibility of improved performance from Wireline operations. Verizon is expected to continue achieving growth and profitability with a focus on gaining share in the retail post-paid market, increasing penetration of smartphones and selling more Internet devices such as tablets. Notably, this Zacks Rank #3 (Hold) company has returned 10.7% in the past six months against the industry’s decline of 0.2%.
However, the company continues to struggle in a highly competitive and saturated wireless market, where spectrum crunch has become a major issue. The company’s Wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable companies.
Stocks to Consider
Some better-ranked stocks in the same space are AT&T Inc. (T - Free Report) , Telenav, Inc. (TNAV - Free Report) and Windstream Holdings, Inc. (WIN - Free Report) . While AT&T sports a Zacks Rank #1 (Strong Buy), Telenav and Windstream Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AT&T surpassed estimates twice in the trailing four quarters with an average positive earnings surprise of 5.86%.
Telenav outpaced estimates in each of the preceding four quarters with an average earnings surprise of 3.72%.
Windstream Holdings exceeded estimates twice in the preceding four quarters with an average earnings surprise of 23.50%.
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