Verizon: The Year Of Investment

Jan. 31, 2019 5:19 PM ETVerizon Communications Inc. (VZ)23 Comments
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WG Investment Research


  • Verizon reported mixed Q4 2018 results that were not well-received by the market.
  • Management plans to heavily investment in what they view as Verizon's key growth driver, 5G. That is why I am calling 2019 "The Year Of Investment" for this telecom company.
  • I am long Verizon, and I may get longer over the next few months.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

Verizon's (NYSE:VZ) stock has been under pressure since the company reported what was widely viewed as mixed Q4 2018 operating results. The stock is down approximately 3 points since releasing results, which brings the YTD performance to -4%.

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The company's recent earnings report and forward guidance were nothing to brag about, but, in my opinion, I believe that Verizon will be well-positioned for the future after the "Year of Investment".

The Latest, The Good (But Not Great) Quarter and Fiscal Year

On January 29, 2019, Verizon reported Q4 2018 results that beat on the bottom line but that missed the top-line estimates. The company reported Q4 2018 EPS of $1.12 (beat by $0.03) on revenue of $34.3B (missed by $160M), which were largely viewed as mixed results. However, the full-year figures were improvements when compared to the prior year.

Source: Q4 and Full-year 2018 Earnings Presentation

The following were the operating highlights from the last quarter of 2018:

  • 1.2M retail postpaid net additions and retail postpaid churn of 1.08%
  • 54K Fios internet net additions with Fios total revenue growth coming in at 2.9% YoY
  • a reduction in total debt (will discuss below)
  • strong cash flow metrics (will discuss below)

The $4.6B write-down for Oath, or should I say Verizon Media (the operating segment was recently rebranded), has garnered the most attention, and rightfully so, as Verizon only recently acquired most of these media assets (AOL in 2015 and Yahoo in 2017). However, in my mind, it makes sense for Verizon to focus on its bread and butter and not spend valuable resources on these long-shot bets. As such, I view the write-down as a necessary evil; however, I do not believe that the media assets are worthless, so let's give the company some time to see if they are able to monetize these businesses in the quarters ahead.

ChartData by YCharts

ChartData by YCharts

This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long VZ, T. 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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