Verizon Stock Has A Bumpy Ride After Just Meeting Expected Earnings

Key takeaways

• Verizon met analysts’ expectations for adjusted earnings per share and revenue
• Verizon was able to add a large number of new wireless subscribers in the fourth quarter, though the company has not grown as fast as some of its competitors
• No total revenue forecast was made for 2023, which could signal worries of a volatile next year

Verizon Communications (VZ) reported fourth-quarter results on Tuesday. The company met estimates but disappointed Wall Street with the 2023 earnings outlook. Verizon stock ended the day 1.99% higher at $40.42 at the closing bell. The stock has been down by around 21% in the past year but still pays dividends to shareholders.

Here’s a look at the numbers, and how investing with AI can help you navigate the markets after earnings reports.

The numbers

• Adjusted earnings per share of $1.19, meeting expectations
• Revenue rose 3.5% year-over-year to $35.3 billion, slightly beating expectations
• Postpaid phone net additions reached 217,000, exceeding expectations of 201,000 new subscribers

Growing competition

Although Verizon saw an increase in subscribers, other companies, such as T-Mobile, have been growing faster. T-Mobile, after its 2020 merger with SprintS
, has a far wider 5G footprint than Verizon, covering 53% of the country compared to Verizon’s 12.8%. Rival companies are posting 4th quarter earnings reports this week too, allowing investors to compare metrics.

Verizon CEO Hans Vestberg, said on Tuesday morning’s earnings call, “You can expect Verizon to compete, but I want to underline again that we will not sacrifice financials for volumes.” He added, “We continue to focus on improving our cost of acquisition and retention and believe current promotion incentives are not sustainable for the industry in the long run.”

2023 guidance misses

A company typically provides a revenue outlook for the upcoming year, but Verizon did not follow that tradition. This can signify a volatile market coming this year for investors. The company expects adjusted earnings per share between $4.55 and $4.85, a drop from stock analysts’ expectations of $4.96 per share. There was no guidance for the total revenue outlook. Other forecasts included wireless service revenue between 2.5 and 4.5 percent, compared to analysts’ estimates of 2.5%. Adjusted EBITDA, which stands for earnings before interest, taxes, depreciation and amortization, was predicted by Verizon to reach between $47 billion and $48.5 billion, missing estimates. Analysts predicted growth of 1.5%, up to $48.7 billion.

Spending to fall

Verizon plans to cut capital spending throughout the next two years. They expect spending to drop between $3.85 billion and $4.85 billion year-over-year as 5G network costs hopefully fall back. Ideally, this will provide a tailwind to free cash flow within the company.

Overall, the economy is still unknown for 2023, and with consumers likely to spend less, Verizon may take more hits.

The bottom line

Verizon’s fourth-quarter results caused a brief bump in the company’s stock price. Investors felt hopeful after seeing Verizon meet analysts’ expectations for adjusted EPS and revenue. But the absence of a forecast for 2023 revenue may give some investors pause. If you want to take the guesswork out of investing, consider looking into one of Q.ai’s Investment Kits. Q.ai uses artificial intelligence to anticipate market movements and adjust users’ portfolios accordingly.

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