Will Verizon Stock Trend Higher Following Its Q2 Earnings?

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Wireless behemoth Verizon (NYSE:VZ) is slated to report its Q2 2022 results on July 22. We estimate that Verizon Revenue will come in at about $33.8 billion for the quarter, roughly in line with consensus estimates and almost flat compared to last year. We project that earnings will stand  at $1.36 per share, marginally ahead of consensus estimates of $1.33 per share. So what are some of the trends that are likely to drive Verizon’s results?

Verizon’s business has been seeing some headwinds of late, as the big growth that the wireless market saw following Covid-19 eases, while competition in the 5G space also mounts. For perspective, over the first quarter, Verizon lost a net of 36,000 postpaid phone subscribers – which are typically the most lucrative segment of the wireless business – compared to AT&T and T-Mobile which added 691,000 and 589,000 subscribers respectively. Moreover, Verizon’s adjusted EPS over Q1 declined to $1.35 per share, from $1.36 in Q1 2021, on account of its continued spending on network upgrades. Rising inflation in the U.S. could also weigh on wireless operators, putting some pressure on the cost side. Further, weaker consumer spending trends could also limit the number of customers upgrading to more expensive plans. Verizon’s business segment could also see growth cool, as small and medium businesses, which were a big driver of growth in recent quarters, potentially see a slowdown.

While we expect Verizon stock to move slightly higher following its Q2 results, we remain marginally positive on Verizon stock, with a $56 price estimate, which is 10% ahead of the current market price. There are a couple of factors that could drive the stock going forward, including Verizon’s deployment of a mid-band spectrum for 5G and its increasing presence in the budget wireless market.  See our analysis on Verizon Valuation: Expensive or Cheap for more details on Verizon’s valuation and how it compares to peers.

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With inflation rising and the Fed raising interest rates, Verizon has fallen 4% this year. Can it drop more? See how low can Verizon stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 VZ Return -1% -4% -6%
 S&P 500 Return 5% -17% 77%
 Trefis Multi-Strategy Portfolio 7% -18% 227%

[1] Month-to-date and year-to-date as of 7/20/2022
[2] Cumulative total returns since the end of 2016

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