Verizon Posts Better-Than-Expected Q4 Results

Multinational telecommunications company Verizon Communications, Inc. (VZ) has reported better-than-expected fourth-quarter earnings driven by increased wireless net additions and accelerated adoption of 5G-capable devices.

The company reported adjusted earnings of $1.31 per share in the fourth quarter, which compared favorably with $1.21 per share recorded in the same quarter last year, and beat analysts’ expectations of $1.29 per share.

Meanwhile, adjusted operating revenue declined 1.8% year-over-year to $34.1 billion but surpassed the consensus estimate of $33.9 billion. Additionally, wireless service revenue came in at $17.8 billion, up 6.5%.

Consumer revenues were $25.7 billion, up 7.4% year-over-year, mainly driven by robust demand for connectivity and products. Notably, the company recorded 667,000 wireless retail postpaid net additions during the quarter.

However, business revenues were marginally lower at $7.7 billion due to a decline in legacy wireline products, partly offset by wireless revenue growth. Markedly, the business recorded 276,000 wireless retail postpaid net additions in the quarter.

In the broadband segment, the company reported 106,000 total broadband net additions, defined as wireline (Fios and DSL) and fixed wireless, up 30,000 year-over-year.

Capital expenditures in 2021 came in at $20.3 billion and continue to support the growth in traffic on the company’s 4G LTE network and aid the continued expansion of the company’s 5G Ultra-Wideband and 5G Nationwide networks.

Looking ahead, CEO of Verizon, Hans Vestberg, said, “As we move into 2022, we have the necessary assets to realize our strategy that we laid out in 2019. We are laser focused on executing our 5G strategy and providing value to our customers, shareholders, employees, and society, as 2022 will be the most exciting year yet for Verizon.”

Outlook

For 2022, the company now projects total wireless service revenue growth of between 9-10% for the year. Excluding the impact of the TracFone acquisition, wireless service revenue is expected to grow by at least 3%.

Additionally, adjusted EPS is expected to be in the range of $5.40 to $5.55 per share, and capital spending, excluding C-Band, is projected to be in the range of $16.5 billion to $17.5 billion.

Stock Rating

Following the results, Deutsche Bank analyst Bryan Kraft maintained a Hold rating on Verizon and raised the price target to $57 (7.8% upside potential) from $56.

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 3 Buys versus 3 Holds. The average Verizon price target of $61 implies 15.3% upside potential to current levels. Shares have increased 2.1% so far this year.

News Sentiment

News Sentiment for Verizon is Positive based on 80 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 63%.

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