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Verizon: 5 Things To Look For In The Upcoming Earnings Release

Robert Riesen profile picture
Robert Riesen


  • Due to continuing softness in performance, Verizon stock as fallen 20% year to date.
  • Wireless connections, sales, dividend payout ratio, and debt levels are the key indicators I look at for the financial health of the company.
  • Verizon has a PEG ratio of 4.6, which is much higher than AT&T's PEG ratio of 1.72.

Verizon (NYSE:VZ) stock continues to decline. So far year to date, the stock has fallen by nearly 20%. This isn't surprising, considering Verizon missed first-quarter 2017 estimates by a wide margin, and there are a number of ominous signs that continue to develop. Second-quarter earnings are due in approximately two weeks (July 27th). Here are the 5 key factors that I'll be looking at:

1. Wireless Retail Connections

The majority of Verizon's profits come from its wireless business, but the amount of wireless retail connections declined in the first quarter of 2017.

Data provided from Verizon's annual reports and earnings releases.

If retail connections decline for a second quarter in a row, I'd be concerned it's the beginning of a trend. This is really the driving force for Verizon, so this figure will be a big factor in the stock continuing to plunge or rebounding. Don't forget that Verizon spent 130 billion to acquire Vodafone's 45% interest in Verizon Wireless a few years ago. That deal is what has put Verizon in the weak position they are today (high debt levels and high dividend payout ratio). That deal was a gamble and now looks like a dud.

2. Sales Trend

In the first quarter of 2017, Verizon missed analyst expectations and showed a 4.5% consolidated revenue decline (excluding divestitures and acquisitions). This has been an ongoing trend, given sales declined in 2016 compared to 2015. Verizon is battling two factors that are pushing its sales down. As I mentioned above, retail connections growth is showing weakness. Second, price wars have been going on for years. Earlier this year, Verizon began offering an unlimited data plan to remain competitive with Sprint (S), T-mobile (TMUS), and AT&T (T). It's not yet clear how this unlimited plan

This article was written by

Robert Riesen profile picture
I'm an avid investor, managing my own portfolio. Im also a previous Series 7 License holder and currently studying for the CFA Level II exam. Previous financial experience includes 5 years at Square 1 Bank, a commercial bank specializing in venture lending to entrepreneurs and venture capitalists: - Assistant Vice President – Life Sciences & Technology Banking - Life Sciences Client Manager - Senior Portfolio Analyst - Portfolio Analyst

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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