Verizon Claims “Strong” Third Quarter While Analysts Differ


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Verizon Communications Inc. (VZ) Friday reported, according to the carrier, strong third-quarter 2019 results highlighted by increased cash flow and the most third-quarter phone gross additions in five years.

“Verizon continued its momentum in the third quarter by driving strong wireless volumes in both our Consumer and Business segments, while delivering solid financial results, highlighted by continued wireless service revenue growth, increased cash flow, and EPS growth,” said Chairman and CEO Hans Vestberg. “We are focused on our 5G rollout strategy, looking to deploy next-generation networks while enhancing our industry-leading 4G LTE network.

Going into the fourth quarter, we are energized by the strong performance of the business and we are confident in our strategy to drive value for our customers and growth for our shareholders.”  

“Is this as good as it gets?” said Craig Moffett of MoffettNathanson. “Verizon almost inarguably got its big strategic decision right by avoiding the ruinous diversification that has so badly hobbled peer AT&T. But they haven’t exactly covered themselves in glory when it comes to execution,” he said.

Moffett said wireline results, while admittedly secondary to wireless, were nothing short of awful in Q3. And Verizon’s wireless business is, for the first time in memory, lagging AT&T’s. “It was AT&T, not Verizon, that secured the FirstNet contract (Verizon didn’t even bid). And it is AT&T, not Verizon, that has the better story to tell about balancing 5G speed AND coverage,” Moffett said.

For third-quarter 2019, Verizon reported EPS of $1.25, compared with $1.19 in third-quarter 2018. The company’s reported earnings include a minimal net impact from special items: a net pre-tax gain of $261 million from dispositions of assets and businesses that was offset by a pension re-measurement pre-tax charge of $291 million. On an adjusted basis (non-GAAP), third-quarter 2019 EPS, excluding special items, was $1.25, compared with adjusted EPS of $1.22 in third-quarter 2018.

In third-quarter 2019, Verizon’s results included the effects of a reduction in benefits from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense, and the adoption of a lease accounting standard. The combined net impact was a four cents headwind in third-quarter 2019, and 13 cents year-to-date, which is included in the year-over-year increase in adjusted EPS.

October 28, 2019

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