VZ Stock: Verizon Earnings Guidance misses estimates amid wireless consumer battle

VZ Stock: Verizon Earnings Guidance misses estimates amid wireless consumer battle

Verizon communications (VZ) on Tuesday reported adjusted fourth-quarter earnings that met estimates but missed 2023 earnings guidance. VZ’s stock bounced back on expectations that more aggressive wireless promotions, primarily smartphone subsidies, will impact earnings in 2023.


For the December quarter, Verizon’s earnings were $1.19 per adjusted share, down 10% from a year earlier, excluding items. Sales rose 3.5% to $35.3 billion.

A year earlier, Verizon earned $1.31 per share on $34.1 billion in revenue. Analysts had expected earnings of $1.19 per share on revenue of $35.1 billion for Verizon for the quarter.

Verizon said it added 217,000 postpaid wireless phone subscribers, versus analyst estimates for a gain of 201,000, including consumer and business subscribers. Verizon added 41,000 consumer subscribers in the fourth quarter. In the September quarter, Verizon lost 89,000 consumer lines.

In the stock market, Verizon shares rose 2% today to close at 40.42. Shares initially fell upon earnings release. Heading into Verizon’s earnings report, VZ’s share was up 1.6% in 2023.

VZ Stock: 2023 Guidance Misses

For 2023, Verizon said it expects adjusted earnings per share of $4.70, midway through guidance. Verizon did not provide a forecast for total revenue. It predicted wireless revenue growth of 3.5% versus estimates of 2.5%.

VZ stock analysts polled by FactSet had estimated earnings for 2023 at $4.96 per share, with sales up 1.2%.

“For context, VZ’s guidance implies that adjusted earnings per share will fall to the level last reported in 2018 ($4.71),” Goldman Sachs analyst Brett Feldman said in a note to clients. VZ shares are down about 20% since Hans Vestberg took over as CEO in August 2018.

Verizon forecast adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — in a range of $47 billion to $48.5 billion, missing estimates. Analysts had forecast growth of 1.5% to $48.7 billion.

Verizon Stock: Capital expenditures down

Oppenheimer analyst Tim Horan said in a note that Verizon offered “weak financial guidance.” He added, “2023 EBITDA flat with 2022, at 3.5% wireless service growth, but EPS was down 9% on higher interest/depreciation/other expenses.”

Verizon shook up its consumer wireless business in December. Furthermore, Verizon let go Manon Brouillette, who joined the company in June 2021 and was promoted to chief executive of the consumer business in January 2022. Vestberg took over Brouillette’s tasks.

“Capital expenditures in 2023 are expected to fall by more than $4 billion year-over-year as 5G network spending slumps, providing a clear tailwind for free cash flow,” SVB Moffett Nathanson analyst Craig Moffett said in a note.

He added: “Growth statistics are uninspiring, especially when you consider that their forecast for wireless service revenue growth includes a benefit of about 190 basis points from the redistribution of revenue previously classified as ‘other revenue’. “

Meanwhile rival AT&T (T) will report fourth quarter numbers early Wednesday. AT&T’s free cash flow outlook will be critical, analysts say. AT&T shares lost a fraction.

Verizon shares fell 24% last year. VZ stocks have a relative strength rating of 29 out of a possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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