The Verizon (VZ) stock price has bounced back in the past few days as investors wait for the company’s third-quarter earnings. It is trading at $52.35, which is about 3% above the lowest level this year. Still, the shares are trading at 10% below the highest point this year.
Verizon earnings preview
Verizon is a major communication company in the US. The firm has a market capitalization of more than $216 billion and annual revenues of more than $128 billion.
The Verizon stock price will be in focus this week as the firm publishes its quarterly results. Data compiled by SeekingAlpha shows that analysts expect that the company’s revenue rose to $33.24 billion in the third quarter. This will be slightly lower than the second-quarter revenue of more than $33.76 billion. But it will be substantially higher than the $31.2 billion that it made in the same quarter of 2020.
Similarly, the company’s profitability is expected to have increased in the third quarter. Analysts expect that the company’s profit rose to $1.36 per share from $1.25 in the same period last year.
In addition to the headline revenue and profits numbers, the stock will mostly react to the company’s guidance. In the previous quarter, the management decided to raise its guidance for the full year. This guidance factored in the sale of the Verizon Media Group, a division that included companies like Yahoo and TechCrunch.
The firm raised its guidance for adjusted EPS to between $5.25 and $5.35. This was a better outlook than the previous range of between $5 and $5.15. Therefore, the VZ stock will likely rise if the company manages to boost its forward guidance.
Analysts will also be looking at other key numbers in the report. For example, they will focus on the overall growth of its wireless business whose revenue rose by 5.9% in the second quarter. They will also be looking at the performance of its retail business, now that most of its stores have reopened. Finally, they will focus on FIOS and business wireless services as more companies go back to the office.
Is Verizon a good investment?
The Verizon stock price has lagged the broader market this year. The share price has declined by 7.64%, while the S&P 500 and Nasdaq 100 have risen by more than 15%. The stock has even lagged behind its peer companies like AT&T and Comcast.
This underperformance is mostly because investors have been focused on fast-growing industries like those in technology, energy, and finance. Also, there have been concerns that Verizon is not growing as fast as other companies.
As a result, the company’s valuation has become relatively low in the past few months. For example, it is trading at a forward PE multiple of 9.96, which is lower than that of the broader market. Its forward EV to EBITDA ratio of 8.13 is also lower than most companies.
The company also offers an attractive dividend yield. The trailing 12-month yield is 4.86%, while the forward yield is about 4.93%. These payouts are relatively safe since the company has a payout ratio of about 48%.
Verizon stock price forecast
The daily chart shows that the Verizon stock price has been in an overall bearish trend. The stock has declined by more than 10% from its highest level this year. It has moved below the 25-day and 50-day moving averages. Also, it has risen above the key resistance level at $52, while the MACD is still below the neutral level. Therefore, the stock will likely resume the bearish trend after earnings.
