Can Verizon (VZ) Pull Off A Surprise This Earnings Season?
Zacks Investment Research | Apr 17, 2017 08:57AM ET
U.S. telecom behemoth Verizon Communications Inc. (NYSE:VZ) is slated to report first-quarter 2017 results, before the opening bell on Apr 20.
Last quarter, Verizon posted a negative earnings surprise of 3.37%. The company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, but it delivered an average miss of 0.07%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Spectrum crunch is a major issue in the U.S. telecom industry and Verizon continues to operate in a saturated and competitive wireless market. Expenses related to Verizon’s promotional plans and lucrative discounts to lure more customers might impact the wireless segment’s EBITDA and EBITDA service margins in the to-be-reported quarter.
The company’s wireline division continues to suffer from persistent losses in access lines owing to competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data, video) offerings from cable companies. We believe these factors have led to the company’s below-par price performance. Over the past three months, Verizon lost 7.5% compared with the Zacks categorized U.S. Earnings ESP Filter .
Zacks Rank: Verizon has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Verizon Communications Inc. Price and EPS Surprise
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