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Verizon Communications (VZ) Earnings Analysis: A Telecom Stock to Bet On?

Verizon Communications (VZ) soared to its best day in almost 15 years, following the company reporting better-than-expected results for its most recent quarter. So, does this indicate a buying opportunity? Let’s discuss...

Verizon Communications Inc. (VZ) outstripped analysts’ projections for both adjusted earnings per share and revenue in the third quarter. Revenue came in at $33.34 billion, surpassing the anticipated $33.25 billion. Adjusted earnings per share also exceeded forecasts, hitting $1.22 against an anticipated $1.18.

Compounding this positive news, Verizon also surpassed Wall Street’s postpaid phone net additions predictions. The company added 100,000 new subscribers versus a consensus estimate of 62,000.

Investors responded favorably to the report, pushing Verizon’s stock to its best day in nearly 15 years.

Furthermore, Verizon re-adjusted its financial forecast for 2023. The company anticipates a free cash flow exceeding $18 billion, marking an increase of $1 billion from its previous guidance.

It’s worth noting that the company has demonstrated a consistent history of rewarding shareholders with dividends. Taking into account the aforementioned financial growth, prospective investors might consider leveraging this favorable time to invest. In the following sections, we’ll delve further into some of Verizon’s key financial metrics.

Analyzing Verizon Communications Inc.’s Key Financial Trends and Fluctuations (2020-2023)

The trailing-12-month net income of VZ has exhibited a general trend of growth with periodic fluctuations over the reported period from December 2020 to September 2023. Here are the key highlights:

  • Starting at a Net Income of $17.8 billion in December 2020, the figures increased consistently for a year, reaching a peak of $22.1 billion in December 2021.
  • This upward trend was slightly disrupted in the first half of 2022, as Net Income dropped by around $1.15 billion by June 2022 and further slipped to $19.29 billion by September 2022.
  • However, VZ rebounded on this descent, climbing back to a net income of $21.26 billion by December 2022.
  • Since then, till the last recorded value in September 2023, a relatively stable pattern can be observed, with Net Income hovering between $20.84 billion to $21.59 billion.

When the first and last values are compared, Net Income has grown from $17.8 billion in December 2020 to $20.9 billion in September 2023. This represents a total growth rate of approximately 18% over the reported period.

The Gross Margin of VZ experienced a general downward trend but mildly fluctuated over the time series of 2020 to 2023. The specifications of the fluctuation are broken down as follows:

  • On December 31, 2020, the Gross Margin was 60.1%
  • During the first quarter of 2021, there was a slight decline to 59.5%
  • Subsequently, the Gross Margin continued to decrease slightly over the course of 2021 through 2022, reaching 56.8% by December 31, 2022
  • However, in the first quarter of 2023, an increase was observed, bringing the Gross Margin back up to 57.2%
  • From the first half of 2023, there was an upward trend – the Gross Margin increased to 58.1% by June 30 and further increased to 58.6% by September 30

Therefore, though there was a consistent decrease from the start of 2021 through 2022, a turn of trend was observed in 2023, with the Gross Margin experiencing growth.

The DPS of VZ displayed a noteworthy positive trend from the end of 2020 to late 2023, demonstrating a steady increase over the period.

  • In December 2020, the DPS was at $2.49.
  • By the end of the first quarter 2021, it rose slightly to $2.50.
  • In June 2021, DPS again increased marginally to $2.51.
  • September 2021 saw an upward tick to $2.52.
  • When reaching December 2021, the data pointed out a small hike, bringing it to $2.54.
  • The increase persisted into 2022, with March, June and September seeing DPS reach $2.55, $2.56 and $2.57, respectively.
  • At the end of 2022, it made a minor climb to attain $2.59.
  • In 2023, the trend went on as the DPS recorded steady growth, reaching $2.60, $2.61, and $2.62 in March, June and September respectively.

Upon comparing the initial value in December 2020 ($2.49) to the most recent point in September 2023 ($2.62), it suggests a growth rate of approximately 5.22%. This depicts a persistent upswing for VZ’s DPS over the examined timeframe, although the precise figure indicates only modest fluctuations between quarters.

Analyzing Verizon Communications’ Share Price Fluctuations from May to October 2023

Based on the data provided, the share price of Verizon Communications Inc. (VZ) has shown some fluctuations over the months from May to October 2023. Here is a brief breakdown of its performance during this period:

  • In May 2023, VZ’s shares began at $37.91 (May 5, 2023). There was a marginal decline throughout the month, closing at $35.66 (May 26, 2023). This represents a deceleration in price.
  • Throughout June 2023, the share price saw a slight fluctuation; it started the month at $35.12 (June 2, 2023) and closed slightly higher at $36.61 (June 30, 2023). There was a momentary increase mid-month to $35.93 (June 16, 2023).
  • In July 2023, the price rose to $36.99 (July 7, 2023), followed by a noticeable drop towards the end of the month, reaching $33.18 (July 21, 2023) - indicating another deceleration phase. However, with a slight recovery, the month-ended price was $34.15 (July 28, 2023).
  • August 2023 saw a slight decline overall from $33.34 (August 4, 2023) to $33.17 (August 25, 2023), with minor fluctuations within this range.
  • In September 2023, the price picked up momentum, initially reaching $34.52 (September 1, 2023), but towards the end of the month and the start of October 2023, it took a downward trajectory, landing at $31.53 (October 6, 2023).
  • By the end of October 2023, the share price experienced a rally, closing the month at $33.41 (October 26, 2023).

In general, the trend for Verizon Communications Inc.’s share price from May to October 2023 is characterized by periodic fluctuations with a slow overall decline followed by a slight increase towards the end of the monitored period. Thus, the growth rate is not consistent, with the share prices facing both acceleration and deceleration phases over these months. Here is a chart of VZ’s price over the past 180 days.

Examining Verizon’s Performance: Stability, Quality, and Value Analysis in 2023

VZ has an overall B rating, translating to a Buy in our POWR Ratings system. It is ranked #3 out of the 18 stocks in the Telecom - Domestic category.

The top three dimensions for Verizon Communications Inc. (VZ) from the provided POWR Ratings data, based on their highest values, are Stability, Quality, and Value.

Stability: This dimension consistently scores the highest ratings, starting with a value of 91 in May 2023 and gradually decreasing to 83 by October 2023. While an overall declining trend is visible, the stability score remains considerably high compared to other dimensions throughout this period.

Quality: The quality dimension sustains a relatively consistent rating throughout the given time span. Starting from May 2023, it registers a steady value of 75, with small fluctuations up to 76 in July and August, before returning to 75 in October 2023. Despite these minor variations, the overall trend is stable, showing the quality aspect of VZ not undergoing significant changes during this period.

Value: For the value dimension, there’s a slight increase observed, starting from 68 in May 2023 and reaching its peak at 73 in August 2023. After a minor dip to 70 in September, it recovers to 71 by October. The upward trend, albeit slight, suggests potential improvements in the perceived value of VZ during this timeframe.

These findings, derived from the POWR Ratings, provide valuable insights into the performance and perceived value of Verizon Communications Inc. (VZ) over these selected months in 2023.

How does Verizon Communications Inc. (VZ) Stack Up Against its Peers?

Other stocks in the Telecom - Domestic sector that may be worth considering are Ooma Inc. (OOMA), Spok Holdings Inc. (SPOK), and IDT Corporation (IDT) -- they have better POWR Ratings.

What To Do Next?

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VZ shares were trading at $33.54 per share on Friday afternoon, down $0.93 (-2.70%). Year-to-date, VZ has declined -8.63%, versus a 8.62% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.


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