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Will Cornavirus-Induced Woes Hurt Verizon's (VZ) Q2 Earnings?
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Verizon Communications Inc. (VZ - Free Report) is scheduled to report second-quarter 2020 results on Jul 24, before the opening bell. In the last reported quarter, the company beat the Zacks Consensus Estimate by 4 cents for an earnings surprise of 3.3%.
The New York-based telecom and media giant is expected to have recorded lower aggregate revenues on a year-over-year basis, primarily driven by disruptions caused by the COVID-19 pandemic despite momentum in its wireless business.
Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.
Factors at Play
During the quarter under review, Verizon continued to launch 5G Ultra Wideband mobility service in select locations across the country, with San Diego becoming the 35th city to have this high-speed, low-latency facility. The company also completed the successful trial of Dynamic Spectrum Sharing to accelerate the pace of 5G network evolution by deploying both 4G and 5G in the same band and proactively allocating spectrum resources between them, based on user demand. This is expected to get reflected in the second-quarter results.
Verizon launched an innovative video chat application in collaboration with a start-up company — TechSee — to help customers troubleshoot technical issues remotely, reducing risks of spreading the deadly virus through physical interaction. The company also collaborated with data-driven TV advertising firm, Ampersand, to monetize content. Per the partnership, Ampersand will be the exclusive seller of Verizon Fios, while leveraging Verizon Media’s video advertising DSP platform.
Moreover, Verizon partnered with Sirius XM Holdings Inc. — a leading audio entertainment company — to power streaming content through its 4G LTE network in Audi models. During the quarter, the company inked a deal with Cooler Screens to extend its digital advertising footprint and redefine the way advertisers seek to reach consumers in the aftermath of the coronavirus-induced lockdown by enhancing the in-store shopping experiences of brick and mortar retail stores. Such technology collaborations are likely to have translated into higher revenues for the Business segment.
However, adverse foreign currency translations, evolving market conditions post the deadly virus outbreak and continued investments for 5G deployments are likely to have led to soft margins. Moreover, free access to educational content for 14 million students in the United States, waiving of wireless voice and data overage fees for all customers and expanded eligibility for low-income Internet programs are likely to have drained the exchequer.
Furthermore, Verizon joined the mass protest campaign by advocacy groups over the handling of controversial posts and hate speeches by Facebook and suspended its advertising displays on the social media platform. This is likely to have affected its revenues in the to-be-reported quarter.
Plagued by such headwinds, the Zacks Consensus Estimate for total revenues for the company stands at $29,910 million. It generated revenues of $32,071 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.16 per share, indicating a decline from $1.23 reported in the year-earlier quarter.
Key Developments in Q2
During the second quarter, Verizon completed the acquisition of San Jose, CA-based video conferencing company — BlueJeans Network. The buyout expands Verizon’s unified communications portfolio by enabling secure cloud-based meetings and interactive events. The move underscores Verizon’s focus on keeping businesses connected, especially during the COVID-19 pandemic. The company further expanded its Virtual Network Services portfolio with the addition of a new hybrid platform from Cisco Systems, offering enterprise customers a more responsive, scalable and flexible network.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Verizon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.23% with the former being pegged at $1.15 and the latter at $1.16. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Verizon Communications Inc. Price and EPS Surprise
Zacks Rank: Verizon currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for NETGEAR, Inc. (NTGR - Free Report) is +6.67% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Jul 22.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +27.29% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Aug 6.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Will Cornavirus-Induced Woes Hurt Verizon's (VZ) Q2 Earnings?
Verizon Communications Inc. (VZ - Free Report) is scheduled to report second-quarter 2020 results on Jul 24, before the opening bell. In the last reported quarter, the company beat the Zacks Consensus Estimate by 4 cents for an earnings surprise of 3.3%.
The New York-based telecom and media giant is expected to have recorded lower aggregate revenues on a year-over-year basis, primarily driven by disruptions caused by the COVID-19 pandemic despite momentum in its wireless business.
Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.
Factors at Play
During the quarter under review, Verizon continued to launch 5G Ultra Wideband mobility service in select locations across the country, with San Diego becoming the 35th city to have this high-speed, low-latency facility. The company also completed the successful trial of Dynamic Spectrum Sharing to accelerate the pace of 5G network evolution by deploying both 4G and 5G in the same band and proactively allocating spectrum resources between them, based on user demand. This is expected to get reflected in the second-quarter results.
Verizon launched an innovative video chat application in collaboration with a start-up company — TechSee — to help customers troubleshoot technical issues remotely, reducing risks of spreading the deadly virus through physical interaction. The company also collaborated with data-driven TV advertising firm, Ampersand, to monetize content. Per the partnership, Ampersand will be the exclusive seller of Verizon Fios, while leveraging Verizon Media’s video advertising DSP platform.
Moreover, Verizon partnered with Sirius XM Holdings Inc. — a leading audio entertainment company — to power streaming content through its 4G LTE network in Audi models. During the quarter, the company inked a deal with Cooler Screens to extend its digital advertising footprint and redefine the way advertisers seek to reach consumers in the aftermath of the coronavirus-induced lockdown by enhancing the in-store shopping experiences of brick and mortar retail stores. Such technology collaborations are likely to have translated into higher revenues for the Business segment.
However, adverse foreign currency translations, evolving market conditions post the deadly virus outbreak and continued investments for 5G deployments are likely to have led to soft margins. Moreover, free access to educational content for 14 million students in the United States, waiving of wireless voice and data overage fees for all customers and expanded eligibility for low-income Internet programs are likely to have drained the exchequer.
Furthermore, Verizon joined the mass protest campaign by advocacy groups over the handling of controversial posts and hate speeches by Facebook and suspended its advertising displays on the social media platform. This is likely to have affected its revenues in the to-be-reported quarter.
Plagued by such headwinds, the Zacks Consensus Estimate for total revenues for the company stands at $29,910 million. It generated revenues of $32,071 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.16 per share, indicating a decline from $1.23 reported in the year-earlier quarter.
Key Developments in Q2
During the second quarter, Verizon completed the acquisition of San Jose, CA-based video conferencing company — BlueJeans Network. The buyout expands Verizon’s unified communications portfolio by enabling secure cloud-based meetings and interactive events. The move underscores Verizon’s focus on keeping businesses connected, especially during the COVID-19 pandemic. The company further expanded its Virtual Network Services portfolio with the addition of a new hybrid platform from Cisco Systems, offering enterprise customers a more responsive, scalable and flexible network.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Verizon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.23% with the former being pegged at $1.15 and the latter at $1.16. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Verizon Communications Inc. Price and EPS Surprise
Verizon Communications Inc. price-eps-surprise | Verizon Communications Inc. Quote
Zacks Rank: Verizon currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Watts Water Technologies, Inc. (WTS - Free Report) is set to release quarterly numbers on Jul 29. It has an Earnings ESP of +18.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NETGEAR, Inc. (NTGR - Free Report) is +6.67% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Jul 22.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +27.29% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Aug 6.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>