Verizon (VZ) Lags Q4 Earnings, Tops Revenues Estimate

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Verizon Communications Inc.VZ is the largest telecom operator in the U.S. providing high-end wireless and wireline services to individuals, business enterprises and government agencies.

The U.S. telecom industry is facing severe competitive pressure at present. Aggressive pricing competition and higher promotional activities are likely to hurt the company's financial results. Verizon has predicted flat year-over-year earnings for 2016 as it does not see enough variables to deliver growth in the coming year. However, the company expects to return to growth trajectory starting 2017.

Nevertheless, we are impressed with Verizon's plans of diversifying its business model. Upcoming 5G wireless network, diversification into digital ad and content market, deployment of high-speed fiber network and forging into IoT space are long-term growth prospects for the company. The LQD WiFi LLC buyout (a New York-based firm specializing in IoT technology) and 'IoT Fast Track' services (to small business owners) are likely to boost Verizon's IoT prospects.

FCC approval for XO Communications buyout, license to install FiOS in Boston along with small cell densification and expansion of dark fiber hint at Verizon's steps in the fiber space. The densification of cell network will help the company to install and build its upcoming 5G network.

Zacks Rank: Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: The Company lags fourth quarter earnings. Our consensus called for an adjusted EPS (earnings per share) of 89 cents while the company reported adjusted EPS of 86 cents.

Revenue: Verizon reported total revenue of $32,340 million surpassing the Zacks Consensus Estimate of $32,160 million.

Key States to Note: In the fourth quarter, Verizon added net 0.591 million retail postpaid connections. Retail postpaid churn increased to 1.10% from 0.96% in the prior-year quarter. At the end of 2016, Verizon had 114.243 million retail connections, up 1.9% year over year.

Stock Price: At the time of writing, the stock price of Verizon was down nearly 2.59% in the pre-market trade on NYSE. Clearly the initial reaction to the release is negative. The company significantly missed the Zacks Consensus Estimate for the bottom line. In the fourth quarter, net addition of postpaid retail connection was 0.591 million, a substantial decline of 61.1% year over year. We believe these are the primary reasons behind this initial negative sentiment.

Verizon Communications Inc. Price and EPS Surprise

Verizon Communications Inc. Price and EPS Surprise | Verizon Communications Inc. Quote

Check back later for our full write up on this Verizon earnings report later!

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Verizon Communications Inc. (VZ): Free Stock Analysis Report

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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.

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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