Verizon Raises Annual Profit Forecast After Strong Subscriber Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy VZ?
Source: Newsfilter
- Subscriber Growth Rebound: Verizon unexpectedly added 55,000 monthly bill-paying wireless subscribers in Q1, marking its first net gain in over a decade, demonstrating the effectiveness of its revamped customer offers and bundled plans, which are expected to drive future revenue growth.
- Profit Forecast Upgrade: The company raised its adjusted profit forecast for 2026 to between $4.95 and $4.99 per share, up from the previous range of $4.90 to $4.95, reflecting increased confidence in future performance.
- Revenue Performance: Although total quarterly revenue came in at $34.4 billion, below market expectations of $34.84 billion, the adjusted profit of $1.28 per share exceeded analyst estimates of $1.20, indicating improved profitability.
- Market Strategy Shift: By offering better terms to attract customers from competitors, Verizon aims to enhance customer loyalty and reclaim market leadership, signaling a strategic shift in its wireless business recovery efforts.
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Analyst Views on VZ
Wall Street analysts forecast VZ stock price to fall
14 Analyst Rating
4 Buy
10 Hold
0 Sell
Moderate Buy
Current: 48.030
Low
43.00
Averages
46.42
High
51.00
Current: 48.030
Low
43.00
Averages
46.42
High
51.00
About VZ
Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, technology, information and streaming products and services to consumers, businesses and government entities. Its Consumer segment provides wireless and wireline communications services. It also provides fixed wireless access (FWA) broadband through its 5G or 4G Long-Term Evolution (LTE) networks portfolio. The Company's Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long-distance voice services and network access to deliver various Internet of Things (IoT) services and products. It provides these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Acquisition Impact: The recent debt increase primarily stems from the $20 billion acquisition of Frontier Communications, and the $53 billion spent on C-band spectrum in 2021, which, while enhancing network quality, has further exacerbated the debt load.
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- Investment Return Potential: Over the past decade, SCHD has achieved a 229% price return, with quarterly dividends increasing from $0.12 in 2011 to approximately $0.25 in early 2026, demonstrating its appeal and stability for long-term investors.
- Capital Requirement Analysis: Calculating with a blended yield of 3.2%, replacing a $75,000 annual income requires about $2.35 million in capital, indicating that pure dividend growth retirement plans take decades to build, reflecting the long-term planning needs of investors.
- Risk and Reward Balance: At an 8.5% blended yield, the capital requirement to replace a $75,000 annual income drops to approximately $885,897, making high yields tempting yet risky, necessitating careful assessment of the balance between returns and risks for investors.
See More
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- Capital Requirement Analysis: To replace an annual income of $120,000 at a 4% yield, approximately $3,000,000 is needed, whereas Ares Capital (ARCC) with a yield of 10.3% only requires $1,200,000, highlighting the significantly lower capital needs for high-yield investments but with increased associated risks.
- Risk and Return Trade-off: High-yield investments such as REITs and BDCs provide greater cash flow but come with the risk of dividend cuts and higher price volatility, thus investors must carefully assess the balance between risk and return.
- Tax Impact Consideration: Qualified dividends are taxed at lower rates, while distributions from BDCs and REITs are taxed as ordinary income, necessitating investors to consider tax implications when restructuring their portfolios to optimize net returns.
See More
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- Rising Debt Burden: Verizon's total debt has surged to $172 billion, up from $158 billion at the end of last year and $144 billion a year ago, significantly exceeding its total equity of $105 billion, indicating increasing financial strain on the company.
- Acquisition Impact: The recent debt increase primarily stems from the $20 billion acquisition of Frontier Communications, and the $53 billion spent on C-band spectrum in 2021, which, while enhancing network quality, has further exacerbated the debt load.
- Ongoing Capital Expenditures: Verizon plans to allocate $16 billion to $16.5 billion in capital expenditures this year, only slightly down from $17 billion last year, which continues to pressure cash flow, as evidenced by a first-quarter free cash flow of $3.8 billion that barely covers $2.9 billion in dividend payments.
- Dividend Risk Escalation: With rising debt and interest expenses, Verizon may face the necessity to cut or suspend its dividend, akin to AT&T's situation in 2022, potentially prompting income investors to sell their shares, leading to short-term stock price declines.
See More
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See More
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- Revenue Continues to Rise: Verizon's overall revenue increased by 2.9% year-over-year to $34.4 billion, with service revenue rising 2.4% to $28.8 billion, indicating successful responsiveness to customer demand.
- Improved Profitability: Adjusted earnings per share (EPS) climbed 7.6% to $1.28, while EBITDA grew 6.7% to $13.4 billion, showcasing the company's dual advantages in cost control and revenue growth.
- Optimistic Future Outlook: Verizon expects to add between 750,000 to 1 million postpaid phone subscribers for the year and has slightly raised its adjusted EPS guidance to a range of $4.95 to $4.99, reflecting confidence in future growth.
See More
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- Tractor Supply Performance: Tractor Supply Company (TSCO) reported first-quarter revenue of $3.6 billion, meeting analyst expectations, but its earnings per share of $0.31 fell short of the $0.34 forecast, resulting in a 2.70% drop in stock price, reflecting market concerns about future growth.
- Same-Store Sales Struggles: TSCO's same-store sales growth was only 0.5%, significantly below the expected 1.6%, although the company anticipates a 1% to 3% increase for the year, indicating challenges in a competitive retail landscape.
- Stability of Realty Income: Realty Income (O), a real estate investment trust, owns over 15,511 retail properties with an occupancy rate exceeding 98%, and has raised its quarterly dividend for 114 consecutive quarters, currently offering a dividend yield of 5.1%, providing investors with stable cash flow.
- Verizon's Ongoing Appeal: Verizon Communications (VZ) added 340,000 net postpaid wireless customers in Q1 and expects to gain one million customers by 2026; despite a 1.80% stock decline, its dividend has increased for 19 years, with a yield over 6%, highlighting its attractiveness to income-focused investors.
See More
