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Verizon Communications (VZ) Gains But Lags Market: What You Should Know

Zacks Equity Research

Verizon Communications (VZ) closed the most recent trading day at $60.36, moving +0.1% from the previous trading session. This change lagged the S&P 500's 0.51% gain on the day. Meanwhile, the Dow gained 0.36%, and the Nasdaq, a tech-heavy index, added 0.75%.

Prior to today's trading, shares of the largest U.S. cellphone carrier had gained 4.07% over the past month. This has outpaced the Computer and Technology sector's gain of 2.59% and the S&P 500's gain of 3.44% in that time.

VZ will be looking to display strength as it nears its next earnings release, which is expected to be October 25, 2019. In that report, analysts expect VZ to post earnings of $1.20 per share. This would mark a year-over-year decline of 1.64%. Meanwhile, our latest consensus estimate is calling for revenue of $32.73 billion, up 0.38% from the prior-year quarter.

VZ's full-year Zacks Consensus Estimates are calling for earnings of $4.81 per share and revenue of $131.36 billion. These results would represent year-over-year changes of +2.12% and +0.38%, respectively.

Investors should also note any recent changes to analyst estimates for VZ. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. VZ currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that VZ has a Forward P/E ratio of 12.55 right now. Its industry sports an average Forward P/E of 16.07, so we one might conclude that VZ is trading at a discount comparatively.

It is also worth noting that VZ currently has a PEG ratio of 3.01. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Wireless National stocks are, on average, holding a PEG ratio of 2.35 based on yesterday's closing prices.

The Wireless National industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 72, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow VZ in the coming trading sessions, be sure to utilize Zacks.com.


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