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Will Robust Wireless Business Buoy Verizon's (VZ) Q1 Earnings?

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Verizon Communications Inc. (VZ - Free Report) is scheduled to report first-quarter 2020 results on Apr 24, before the opening bell. In the last reported quarter, the company posted a negative earnings surprise of 1.7%, while missing the Zacks Consensus Estimate by 2 cents.

The New York-based telecom and media giant is expected to have recorded slightly higher aggregate revenues on a year-over-year basis, primarily driven by momentum in its wireless business despite disruptions caused by COVID-19 pandemic.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.

Factors at Play

During the quarter under review, Verizon collaborated with HERE Technologies to explore cutting-edge applications of Verizon’s 5G Ultra Wideband network and multi-access edge compute platform, 5G Edge along with HERE’s location technology and autonomous vehicle expertise. The company unveiled a completely new way to provide Internet and TV with Mix & Match on Fios. These factors are expected to have made an impact on the company’s first-quarter performance.

Verizon Media launched OneSearch, a new consumer search experience with enhanced privacy features. Verizon Business Group partnered with Audi of America to deliver advanced connectivity and embedded in-vehicle Wi-Fi beginning with the evolution of Audi’s connected vehicle service launching on the 2020 Audi A4 and A5 model lines in the United States. Verizon teamed up with Google to offer next-gen cloud gaming experience.

Verizon and Dignitas entered into a first-of-its-kind partnership to launch the nation’s first 5G e-sports training facility. The company collaborated with Honeywell to help utilities ramp up and simplify the deployment of new communication-enabled, intelligent sensors and controls for the smart electric grid. Verizon Media partnered with digital out of home (OOH) marketplace, VIOOH, to solidify its leadership position. Verizon and Emory Healthcare entered into a partnership to develop and test 5G Ultra Wideband-enabled use cases that could transform the healthcare industry.

Verizon Business and Mitsui Bussan Secure Directions joined forces to help Japan-based businesses mitigate the rising threat of cybercrime. Verizon Business expanded its security portfolio with new solutions to help businesses better protect themselves against cybercrime — Verizon Managed Detection and Response; Verizon Identity and Verizon Machine State Integrity. Also, the company enhanced its Rapid Response Retainer service, which offers companies cyber intelligence and incident response capabilities directly from the Verizon Threat Research Advisory Center. The company’s performance is expected to have benefited from these positives.

Verizon Business teamed up with Pacific Northwest National Laboratory to support its mission to tackle some of the world’s greatest science and technology challenges in areas like national security, energy efficiency and scientific discovery. Yahoo, part of the Verizon Media portfolio, unveiled its first-ever unlimited phone plan — Yahoo Mobile.

For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $32,406 million that indicates a rise of 0.9% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at $1.22, which calls for an increase of 1.7% from the prior-year quarter’s recorded figure.

Key Developments in Q1

Verizon, together with Samsung Electronics Americas, Motorola Mobility and Qualcomm Technologies, demonstrated 5G peak speeds of 4.2 gigabits per second on its live 5G network. Using carrier aggregation, a technology that combines multiple channels of spectrum to provide greater efficiency for data sessions transmitting over the wireless network, the four companies combined eight separate channels of mmWave spectrum to achieve the multi-gigabit speeds on Motorola’s flagship smartphone.

Three new cities went live with Verizon 5G Ultra Wideband service — Little Rock, AR, Kansas City, MO and Cincinnati, OH. These cities join the list of 31 5G Ultra Wideband cities launched in 2019.  Verizon’s 5G Ultra Wideband network is currently accessible in 24 professional football stadiums and indoor arenas primarily used for hockey and basketball games. The company’s 5G Home Internet service is available in parts of Chicago, Houston, Indianapolis, Los Angeles and Sacramento.

Verizon signed onto the FCC’s “Keep Americans Connected” pledge. For 60 days, the company waived late fees that any residential or small business customers incur because of economic circumstances related to the coronavirus. Verizon leaders and the Crisis Management Team are meeting every day to stay updated on new developments.

Earnings Whispers

Our proven model doesn’t predict an earnings beat for Verizon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.12%.

Verizon Communications Inc. Price and EPS Surprise

Zacks Rank: Verizon currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

FB Financial Corporation (FBK - Free Report) is slated to release quarterly results on Apr 27. It has an Earnings ESP of +15.94% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Heartland Financial USA, Inc. (HTLF - Free Report) is scheduled to release results on Apr 27. The company has an Earnings ESP of +11.90% and a Zacks Rank #3.

Banner Corporation (BANR - Free Report) has an Earnings ESP of +10.12% and a Zacks Rank of 3. The company is set to report results on Apr 27.

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