VZ share: is it a buy or a sell? Here’s what the earnings chart shows on Verizon Stock

While VZ stock has consistently underperformed the S&P 500, the telecom giant often attracts income-oriented investors, thanks to its dividend. If 5G wireless services revive earnings and revenue growth, Verizon stock could have much greater appeal.




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Shares in Verizon Communications (VZ) is down 10% so far in 2023. VZ stock has fallen on concerns Amazon.co.uk (AMZN) may resell wireless services under its own brand.

New York-based Verizon could be in a tough spot as wireless industry growth slows amid competition with AT&T (T) and T-Mobile United States (TMUS), analysts say.

The Verizon brand has also lost some pep as the company struggles to regain its marketing claim to operate the highest quality wireless network.

Amid management changes, the company is focused on generating growth in services revenue, free cash flow and earnings before interest, taxes, depreciation and amortization.

“We expect Verizon to be the only operator with sufficient cash flow after dividends/repurchases to substantially pay down maturing debt rather than refinance it in the medium term,” SVB MoffettNathanson analyst Craig Moffett said in a report.

Component of the Dow Jones, the VZ share pays a dividend of 4.8%.

Stock VZ: 5G revenue growth delayed

Additionally, Verizon launched new consumer wireless plans.

“We believe the team has made solid progress in turning the ship from the more disappointing performances of 2022 and is poised to see some changes over the next year,” said Frank Louthan, analyst at Raymond James, in a report.

Samuel Beckett’s popular piece “Waiting for Godot” could be relevant for Verizon stocks and 5G wireless services. It takes much longer than expected for 5G synergies to take place.

Verizon’s consumer wireless business has yet to get a significant boost in revenue from 5G smartphone users. On the bright side, Verizon in 2022 added 1.17 million fixed-line broadband subscribers to homes, up from about 400,000 the previous year. But revenue from commercial 5G services using private networks has disappointed.

Stock Verizon: 5G network creation key

A VZ share buyback has been delayed by purchases of radio spectrum needed for 5G services. Verizon has a medium-band and high-frequency millimeter wave radio spectrum. Its 5G network is now available to 200 million people in the United States

Revenue growth remains a problem. Data-intensive mobile video hasn’t proven to be a big source of revenue. Verizon has focused on upgrading consumers to unlimited data plans to increase average monthly revenue per user.

Verizon is expanding 5G fixed broadband services to homes and businesses. Cable companies currently dominate residential broadband. Verizon said its fixed broadband service will reach 30 million homes by the end of 2023.

Verizon expects commercial 5G services using private network links to gain momentum in 2024. Additionally, it is investing in “edge mobile computing” sites.

Verizon has partnered with Amazon Web Services, the cloud computing arm of Amazon, to develop 5G applications for web-connected industrial devices. Another partner is IBM (IBM).

Experts expect 5G wireless to play a role in manufacturing automation, cloud gaming, autonomous vehicles, drones and remote healthcare services.

VZ Stock: new management team

At a recent Morgan Stanley conference, Verizon announced plans to use artificial intelligence technology to improve customer service and reduce operating expenses.

Much of Verizon’s senior management has come from outside the telecommunications company. Verizon chief executive Hans Vestberg held the same position at the networking equipment maker Ericsson (ERICY) before joining Verizon. Vestberg and Chief Strategy Officer Rima Qureshi, also an Ericsson veteran, both joined Verizon in 2017.

Additionally, Verizon announced executive changes on March 3, including the departure of CFO Matt Ellis.

Verizon also announced that Sowmyanarayan Sampath will become CEO of Verizon Consumer Group. Sampath previously ran the Verizon Business Group. In December, Verizon let go of Manon Brouillette, the head of the struggling consumer business.

Kyle Malady, head of global networks and technology, has been named CEO of Verizon Business Group.

Verizon chief marketing officer Diego Scotti resigned in mid-May after nearly nine years in the role.

Verizon stock: market share losses

In a bright spot, Verizon in November finally closed the $6.25 billion acquisition of Tracfone from the Mexican company. America Movil (AMX). Tracfone sells prepaid wireless services. If a recession hits, all of America’s mobile phone companies will step up their marketing to the low end of the wireless market – prepaid customers.

Verizon’s efforts to diversify into Internet content have backfired.

Verizon in May 2021 sold a 90% stake in its media and advertising business to Apollo Global Management for $5 billion.

Content partnerships are key.

Verizon has partnered with waltz disney (DIS) in video streaming services. Verizon has also partnered with Apple (AAPL) for music services and with sports leagues.

Fundamentals of VZ shares

For the March quarter, Verizon’s earnings were $1.20 per adjusted share, excluding one-time special items related to the Tracfone acquisition. Earnings fell 11% from a year earlier. Revenue fell 1.9% to $32.9 billion.

A year earlier, Verizon earned $1.35 a share on revenue of $33.6 billion. Analysts had forecast Verizon earnings of $1.19 per share on revenue of $33.6 billion for the quarter.

Verizon said it lost 127,000 postpaid wireless phone subscribers, compared to an estimate of 120,000 by analysts, including consumers and businesses. The consumer unit lost 263,000 postpaid telephone subscribers.

A year earlier, Verizon had lost 36,000 postpaid phone subscribers.

The telecommunications company added 393,000 fixed wireless broadband customers, slightly more than the previous quarter.

Verizon Stock: Is It a Buy It Now?

Verizon stock fell 24% in 2022.

Technical ratings weakened. VZ stock holds a relative strength rating of 22 out of the best possible 99, according to the IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or higher.

Additionally, Verizon stock has an IBD composite rating of 23 out of the best possible 99. IBD’s composite rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a composite rating of 90 or higher.

Meanwhile, Verizon stock holds an accumulation/distribution rating of D-plus. This note analyzes a stock’s price and volume changes over the past 13 weeks of trading. The rating, on a scale of A+ to E, measures the institutional buying and selling of a stock. A+ means large institutional purchases; E stands for heavy sale. Think of the C note as neutral.

As of June 12, VZ stock has no valid entry point. He must forge a new base.

Investors could take a look at other 5G stocks, such as chipmakers or networking equipment vendors.

Meanwhile, emerging 5G wireless applications could take years to generate significant revenue. Rather than buying Verizon stock, income-oriented investors might consider a large ETF such as SPY, which tracks the S&P 500.

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

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