VZ Stock: Verizon’s earnings guide misses estimates amid wireless consumer struggles

Verizon connections (VZ) on Tuesday reported adjusted earnings for the fourth quarter that matched estimates, but its 2023 earnings forecast didn’t materialize. VZ stock fell on expectations that more aggressive wireless promotions, especially smartphone support, will weigh on 2023 earnings.

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For the December quarter, Verizon earnings were $1.19 per share adjusted, down 10% from a year earlier, excluding items. Revenue increased 3.5 percent to $35.3 billion.

A year ago, Verizon earned $1.31 a share on revenue of $34.1 billion. Analysts expected Verizon earnings of $1.19 per share on revenue of $35.1 billion for the quarter.

Verizon said it added 217,000 postpaid wireless phone subscribers, versus analyst estimates for a gain of 201,000, including consumer and business subscribers. Verizon added 41,000 consumer subscribers in the fourth quarter. In the September quarter, Verizon lost 89,000 consumer lines.

On the stock market todayVerizon stock rose 2%, closing at 40.42. Shares initially fell upon the earnings release. As Verizon’s earnings report approaches, VZ stock is up 1.6% in 2023.

VZ Stock: 2023 missteers

For 2023, Verizon said it expects adjusted earnings per share of $4.70, halfway through guidance. Verizon has not provided a total revenue forecast. Wireless revenue growth is expected at 3.5% versus estimates of 2.5%.

VZ stock analysts polled by FactSet estimated 2023 earnings at $4.96 per share with revenue up 1.2%.

“For context, the VZ guidance suggests adjusted earnings per share will decline to levels most recently reported in 2018 ($4.71),” Goldman Sachs analyst Brett Feldman said in a note to clients. VZ stock is down about 20% since Hans Vestberg took over as CEO in August 2018.

Verizon expected adjusted EBITDA — earnings before interest, tax, depreciation and amortization — in a range of $47 billion to $48.5 billion, below estimates. Analysts had expected growth of 1.5% to $48.7 billion.

Verizon Stock: Capital Spending Falls

Oppenheimer analyst Tim Horan said in a note that Verizon offered “weak financial guidance.” He added, “Earnings before interest, taxes, depreciation, and amortization were stable for 2023 compared to 2022, with wireless services revenue growing by 3.5%, while earnings per share decreased by 9% due to higher interest / depreciation / other expenses.”

Verizon in December rocked its consumer wireless business. Furthermore, Verizon let go of Manon Brouillette, who joined the company in June 2021 and was promoted to CEO of the consumer business in January 2022. Brouillette’s duties were taken over by Vestberg.

“Capital spending in 2023 is expected to decline by more than $4 billion year-on-year as 5G spending tapers off, providing a clear free cash flow tailwind,” SVB Moffett-Nathanson analyst Craig Moffitt said in a note. .

He added, “Growth metrics are uninspiring, especially when one considers that their wireless service revenue growth guidance includes an advantage of approximately 190 basis points from the reallocation of revenue previously classified as ‘other revenue.'”

Meanwhile, a competitor AT&T (t) announces fourth-quarter earnings early Wednesday. AT&T’s Free cash flow projections It will be the key, analysts say. AT&T stock lost a fraction.

Verizon stock It fell 24% last year. VZ stock carries a relative strength rating of 29 out of 99, according to IBD stock check.

Follow Reinhardt Krause on Twitter @employee For updates on 5G wireless networks, artificial intelligence, cybersecurity, and cloud computing.

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