Healthy Wireless Traction to Aid Verizon (VZ) Q3 Earnings

Verizon Communications Inc. VZ is scheduled to release third-quarter 2019 results before the opening bell on Oct 25. The company is likely to have recorded higher year-over-year revenues from the Wireless segment, which accounts for lion’s share of total revenues.

Factors at Play

During the quarter, Verizon spurred technological innovation and economic development by making the ecosystem more pervasive with 4G LTE, and focused on increased 5G deployment across select U.S. cities. The telecom behemoth launched 5G Ultra Wideband network in certain locations of Atlanta, Detroit, Indianapolis, Washington DC, Phoenix, St. Paul, New York City, Panama City and Boise to bring the tally to 13. Also, Verizon launched its fifth 5G-enabled device — Inseego Corp.’s MiFi M1000 — that combines large bandwidth and fast download speeds for data-extensive applications. These are expected to be reflected in third-quarter results.

The Wireless segment margin is likely to have witnessed healthy improvement in on the back of a solid fiber-optic network. Notably, the segment EBITDA is expected to improve 0.9% year over year to $11,063 million. Net subscriber addition in the domestic Wireless retail postpaid division is likely to be 527 million, up from 515 million in the prior-year quarter.

Overall Expectations

The Zacks Consensus Estimate for the Wireless segment operating income stands at $8,769 million, indicating a rise of 3% from the year-ago reported number. The consensus estimate for the segment’s operating revenues is pegged at $23,437 million, suggesting 2% growth from the year-ago reported figure of $22,973 million. The higher revenue expectations can be attributed to an uptick in demand and an upgrade to state-of-the-art infrastructure.

The consensus mark for total revenues is $32,715 million. It generated revenues of $32,607 million in the prior-year quarter. The Zacks Consensus Estimate for earnings is currently pegged at $1.24 per share, up from $1.22 reported in the year-earlier quarter. (Read More: Can Wireless Strength Drive Verizon's Q3 Earnings?)

Earnings Whispers

Our proven model predicts an earnings beat for Verizon in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Verizon Communications Inc. Price and EPS Surprise


Verizon Communications Inc. Price and EPS Surprise

Verizon Communications Inc. price-eps-surprise | Verizon Communications Inc. Quote

Zacks Rank: Verizon has a Zacks Rank #2.

Other Stocks to Consider

Here are some other 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:

AT&T Inc. T is set to release quarterly numbers on Oct 28. It has an Earnings ESP of +0.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for T-Mobile US, Inc. TMUS is +0.55% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Oct 28.

The Earnings ESP for Sprint Corporation S is +27.78% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Oct 30.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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