Telecommunications major Verizon Communications Inc. (NYSE: VZ) posted mixed results for the second quarter ended June 30, 2022. Although revenue surpassed estimates, earnings failed to do so.
Shares of the company declined by 6.7% in the normal trading hours due to its lowered guidance. However, the stock recovered marginally to close at $44.48 in Friday’s extended trade.
Revenues Rise, Earnings Decline
Verizon’s operating revenues for the quarter came in at $33.79 billion, up marginally from the previous year. The figure surpassed the consensus estimate of $33.71 billion. The core service revenues of the company declined by 3.9% year-over-year to $27.12 billion. The decline in this segment, which made up more than 80% of the total quarterly revenues of the company, hurt the overall growth.
The company reported earnings per share (EPS) of $1.31 for the quarter. This indicates a decline of 5.8% from the previous year. Further, the figure missed the consensus estimate of an EPS of $1.32 by a whisker.
Operating Metrics: A Glance
Verizon reported an operating income of $7.55 billion, which represents a decline of 7.5% from the previous year.
The company reported total broadband net additions of 268,000, including 256,000 fixed wireless net additions and 12,000 postpaid phone net additions.
Meanwhile, the company’s dividend yield of 5.34% is above the sector average of 0.94%.
Verizon Lowered 2022 Guidance
Verizon lowered its guidance for 2022.
For 2022, the company now expects wireless service revenue growth of 8.5% to 9.5%, compared to 9% to 10% earlier. Similarly, the company had earlier anticipated flat growth in service and other revenues for the year. This has now been lowered to a decline of 1% to flat growth for the year.
In terms of EPS, the company expects the same to be between $5.10 to $5.25 for the year, compared to $5.40 to $5.55 earlier.
Management’s Commentary
CEO of Verizon, Hans Vestberg said, “As the market leader, in a very competitive industry, we are determined to improve our operational and financial performance for the second half of the year. With our network-as-a-service foundation, our new consumer mobility plans, and recent pricing actions, we are being deliberate in our decisions to improve our profitable growth opportunities today and into the future.”
Wall Street’s Take
Consensus among analysts is a Hold based on two Buys, 12 Holds, and one Sell. The VZ average price target of $55.08 implies upside potential of 23.9% from current levels. Shares have declined 20.3% over the past year.
Website Traffic Showing Upbeat Trends
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Verizon’s performance this quarter.
According to the tool, the Verizon website recorded a 53.32% monthly rise in global visits in June, compared to the same period last year. Moreover, year-to-date, Verizon website traffic increased by 49.42%, compared to the previous year.
Although Verizon’s results were a bit muted, its increasing website traffic trends hint at the fact that the company’s offerings and services are in demand. Learn how Website Traffic can help you research your favorite stocks.
Final Thoughts
Amid an impending recession, Verizon’s lowered guidance is a cause of concern as consumer spending remains slow. Further, the company’s slowing earnings growth remains a headwind.
However, a continued increase in net additions and an attractive dividend yield can give support to the company’s stock.
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