Verizon Earnings Preview: Will The Postpaid Momentum Continue?

by Trefis Team
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Verizon (NYSE:VZ) is expected to publish its Q1 FY’19 earnings on Tuesday, April 23. Below, we take a look at some of the key trends we will be watching when the company reports results.

What to expect from Verizon’s Q1 results:

  • Consensus EPS of $1.17 per share, almost flat year-over-year
  • Consensus revenue of $32.3 billion, a slight increase over Q1 FY’18

What are some of the factors impacting the sluggish growth?

  • While revenues will expand modestly, driven by stronger postpaid phone performance, this will be partly offset by declines in the wireline business.
  • Earnings may be impacted by a slightly higher tax rate, as tax benefits that were realized in 2018 are unlikely to repeat this year

What is driving the postpaid business?

  • Postpaid wireless business accounted for ~45% of revenues in FY’18
  • Over Q4, the carrier added 653k phone subscribers, marking a 295k sequential increase. While growth should continue driven by the “mix and match” offering, which allows family plan users to customize individual lines, net adds could slow sequentially.
  • Postpaid phone churn, which stood at 0.82% last quarter, could come under pressure due to higher competition

How Is Verizon’s 5G rollout progressing?

  • Verizon was the first to offer 5G services in the U.S. on a commercial basis, launching 5G home broadband 4 cities in October 2018.
  • We will be looking for updates on how the 5G home business is faring and for updates on the commercial launch of 5G mobility services
  • The company expects CapEx for the year to rise to as much as $18 billion, driven by the 5G rollout.

Our interactive dashboard on What’s Driving Our Valuation For Verizon details our key forecasts and drivers for the company. You can modify any of our forecasts and estimates to gauge the impact changes would have on the company’s valuation.

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