Conservative · Income · Stocks to Consider and Updates

Verizon Beats on Earnings/Misses Revenue; Forecasts Slower Growth

Verizon Communications, Inc. (NYSE: VZ – $53.27) reported total operating revenue for the fourth quarter rose one percent to $34.28 billion, missing the average analyst estimate of $34.44 billion. Net income was $1.94 billion, and on an adjusted per share basis tallied $1.12 compared with an adjusted $0.86 a year ago and three cents ahead of Street estimates. Wireless segment revenue increased 2.7% to $24.4 billion. Retail postpaid churn in the fourth period was 1.08% and retail postpaid phone churn was 0.82%.Total Wireline segment revenues decreased 3.2% from a year ago. Total Fios revenues grew 2.5% in the quarter from last year adding a net increase of 54,000 Fios Internet connections and lost a net of 46,000 video connections, continuing to reflect the shift from traditional linear video to over-the-top offerings. The company’s Media Group revenue (which includes the Yahoo and AOL acquisitions) was negative by 6% from last year to $2.1 billion and is undergoing major restructuring. For the full year, Verizon posted total adjusted earnings of $4.71 per share compared with 2017’s $3.74.  

       The company forecast an increase in 2019 capital spending in the range of $17 to $18 billion, including expanding commercial launch of its 5G wireless technology, from $16.7 billion last year. The shares are trading some 3% lower after it forecast low single-digit percentage growth in revenues for the year and adjusted earnings per share similar to 2018 as it continues to struggle with its media assets. The good-quality stock, however, still offers worthwhile capital-appreciation potential through the early years of the coming decade. The well-covered annual dividend of $2.41 yields 4.4% and should continue grow moderately in the years ahead. The shares are worth holding in well-diversified conservative and income accounts.

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