Technology

Wireless Revenue Momentum to Aid Verizon (VZ) Q1 Earnings

Verizon Communications Inc. VZ is scheduled to release first-quarter 2019 results before the opening bell on Apr 23. The company is likely to witness solid year-over-year revenues from the Wireless segment, which accounts for the lion’s share of total revenues.

Whether this will benefit its bottom line remains to be seen.

Key Factors

During the quarter, Verizon continued its healthy momentum in the wireless business by optimizing growth opportunities in the upcoming 5G era while thwarting competition with innovative products and services.

The largest U.S. wireless carrier by subscribers has spurred technological innovation and economic development by making the ecosystem more pervasive with 4G LTE, and is now focusing on 5G deployment across select U.S. cities. This will enable the telecom behemoth to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investments, which in turn are likely to translate into higher revenues in the first quarter.

The acquisition of ProtectWise, Inc., closed in March 2019, will further help Verizon expand its product offering and augment cybersecurity platform. The company is also betting big on Verizon Digital Media Services – an integrated digital media platform that monetizes online content. Verizon has collaborated with industry-leading web-based video playback services providers, THEO Technologies and Iris.TV, to enrich its video streaming network. The integration of the THEOplayer Universal Video Player and IRIS.TV’s Video Personalization Platform will expand capabilities of Verizon Digital Media Services to offer more personalized service to users and thwart competitive pressure. All these are expected to drive first-quarter results.

Overall Expectations

Buoyed by such tailwinds, the Zacks Consensus Estimate for operating revenues in the Wireless segment in the to-be-reported quarter is currently pegged at $22,636 million. Notably, it reported revenues of $21,900 million in the year-ago quarter. The higher revenue expectations can be attributed to an uptick in demand and an upgrade to state-of-the-art infrastructure.

Total revenues for the company are expected to be $32,165 million. It generated revenues of $31,772 million in the prior-year quarter. (Read More: Will Solid Wireless Traction Boost Verizon Q1 Earnings?)

Earnings Whispers

Our proven model conclusively shows that Verizon is likely to beat earnings in the first quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.02%. 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. Quote

Zacks Rank: Verizon has a Zacks Rank #3. This increases the predictive power of our model and a positive ESP makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
   
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:

CommScope Holding Company, Inc. COMM is expected to release quarterly numbers on May 7. It has an Earnings ESP of +1.89% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Juniper Networks, Inc. JNPR is scheduled to release results on Apr 25. The company has an Earnings ESP of +10.00% and has a Zacks Rank #2.

The Earnings ESP for Acacia Communications, Inc. ACIA is +5.73% and it carries a Zacks Rank of 2. The company is slated to report quarterly numbers on May 2.

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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.