Verizon: the good, the bad, and the competition

Verizon Communications (VZ) reported fourth-quarter adjusted earnings that met estimates, however, the company's 2023 earnings outlook missed. The company's stock fell amid expectations that more aggressive wireless promotions will impact 2023 profit.

Verizon earnings For the December quarter, were $1.19 an adjusted share, down 10% from a year earlier, excluding items. Revenue rose 3.5% to $35.3 billion. Analysts had projected Verizon earnings of $1.19 a share on revenue of $35.1 billion for the quarter.

Verizon The company recorded fourth-quarter net income of $6.7 billion, or $1.56 a share, compared with $4.74 billion, or $1.11 a share, in the year-prior quarter. After adjustments, Verizon earned $1.19 a share, compared with $1.31 a share a year before. The company matched the FactSet consensus, which was for $1.19 a share.

The Q4 Report

Verizon said it added 217,000 postpaid wireless phone subscribers, which is higher than the analyst estimates of 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.

For 2023, Verizon said it expects adjusted per-share earnings of $4.70 at the midpoint of guidance. Verizon did not provide a total revenue outlook. It forecast wireless service revenue growth of 3.5% versus estimates of 2.5% growth. VZ stock analysts polled by FactSet had estimated 2023 earnings at $4.96 per share with revenue edging up 1.2%.

Verizon forecast adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in a range of $47 billion to $48.5 billion, missing estimates. Analysts had predicted adjusted EBITDA growth of 1.5% to $48.7 billion.

In December, Verizon shook up its consumer wireless business. The company let go of Manon Brouillette, who joined the company in June 2021 and was promoted to chief executive of the consumer business in January 2022. Chief Executive Hans Vestberg took over Brouillette's duties.

Verizon vs AT&T

The company's rival, AT&T, reported fourth-quarter earnings early Wednesday. AT&T's free cash flow outlook will be key, according to analysts. AT&T stock lost a fraction.

Verizon stock retreated 24% last year. According to IBD Stock Checkup, VZ stock holds a Relative Strength Rating of 29 out of a possible 99.

During the latest quarter, Verizon saw 379,000 fixed-wireless net additions. The performance there was “a bright spot for Verizon,” according to Third Bridge analyst Jamie Lumley, though he wrote that “even after a strong quarter, it is clear that T-Mobile is still leading the pack for this offering.”

Verizon vs T-Mobile

T-Mobile US Inc. hasn’t formally reported, but the company disclosed ahead of an investor conference earlier this month that it saw 927,000 postpaid phone net additions during the fourth quarter. Verizon’s earnings report comes a day ahead of earnings for AT&T Inc.

In conclusion, while Verizon saw positive subscriber growth in its consumer postpaid phone business during the latest quarter, its full-year earnings outlook fell short of analyst expectations. The company's promotions also weighed on margins, and the company's capital spending for the full year was lower than the FactSet consensus. Meanwhile, T-Mobile continues to lead in terms of fixed-wireless net additions.