Verizon Communications Inc. VZ is scheduled to report first-quarter 2025 earnings on April 22, before the opening bell. The Zacks Consensus Estimate for sales and earnings is pegged at $33 billion and $1.15 per share, respectively. Earnings estimates for VZ have improved marginally from $4.69 per share to $4.70 for 2025 and have remained unchanged at $4.86 per share for 2026 over the past 30 days.

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Earnings Surprise History

The communication services provider has had a modest earnings surprise history in the trailing four quarters, exceeding earnings expectations on each occasion. It delivered a four-quarter earnings surprise of 1.33%, on average. In the last reported quarter, the company pulled off an earnings surprise of 0.92%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

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Earnings Whispers

Our proven model predicts a likely earnings beat for Verizon for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. That is exactly the case here.

Verizon currently has an ESP of +0.10% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping Upcoming Results

In the first quarter, Verizon introduced a converged offering for home and mobile internet customers. The bundled internet plans make the home internet client eligible for a $15/ month discount when combined with a postpaid mobile plan. Moreover, mobile phone customers adding a home Internet plan will be eligible for a $10/ month perk credit, which can be used to opt for various entertainment channels like Netflix, Max, and more. The customers with bundled plans will receive priority customer support. Such a customer-focused approach is expected to have generated incremental revenues during the quarter.

The company collaborated with Ericsson and Qualcomm to set a new 5G uplink speed of 480 Mbps. This will likely boost its prospects in various sectors. Verizon has joined forces with Spain-based banking giant Banco Santander, S.A. Per the deal, Verizon customers will benefit from extended bill credits once they open a high-yielding savings account with Santander's new digital bank platform, Openbank. These factors are likely to have led to higher revenues in the Consumer segment.

The Zacks Consensus Estimate for revenues from the Consumer segment is pegged at $25.35 billion, while our model projects revenues of $25.23 billion.

During the quarter, Verizon introduced the Verizon Business Assistant, a generative AI powered solution that streamline customer interactions for small businesses. Its enticing messaging features are available 24/7 and its automated response capability swiftly answers client queries.

Verizon augmented cybersecurity measures for larger mid-sized businesses with the launch of the Trusted Connection solution. The company entered into a strategic partnership with Accenture to develop cutting-edge cybersecurity solutions for businesses across industries. 

In the to-be-reported quarter, Verizon collaborated with Honeywell International to deliver a cutting-edge bundled solution aimed at streamlining business operations for retail and logistics companies. These efforts are likely to have translated into incremental revenues in the Business segment.

The Zacks Consensus Estimate for revenues from the Business segment is pegged at $7.36 billion, while our model projects revenues of $7.35 billion.

However, the company is witnessing weakness in the wireline business induced by challenging macroeconomic conditions. The company is also witnessing Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Management’s strategy of running promotional activities to lure customers from rivals AT&T and T-Mobile is also putting pressure on profitability.

Price Performance

Over the past year, VZ has improved 12.7% compared with the industry’s growth of 44.2%. It has underperformed its peers like AT&T Inc. T and T-Mobile US Inc. TMUS over this period.

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Key Valuation Metric

From a valuation standpoint, Verizon appears attractive relative to the industry, despite trading above the mean. Going by the price/earnings ratio, the company shares currently trade at 9.28 forward earnings, lower than 14.13 for the industry but higher than the stock’s mean of 9.06.

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Investment Consideration

Verizon is placing strong emphasis on expanding its network portfolio. Its recent demonstration of industry-leading uplink speed is a game changer for supporting AI native systems, real-time video transmission, sensor data transfer, and bolstering responsiveness for a wide range of applications. The company’s business approach aligns with customers’ evolving digital lifestyle. Its strategy of combining fast connectivity with digital entertainment options, improvement in service quality while reducing costs, is expected to drive customer additions.

Its Complete Business Bundle solutions, which include plug-and-play Internet connectivity, desk phone, and security solutions with 24/7 tech support, are also gaining popularity. Steady investment in fiber infrastructure and efforts to improve availability of its 5G Ultra-Wideband network across the country are key growth drivers.

However, Verizon operates in a capital-intensive and highly competitive industry. High capital expenses to support the introduction and continuous build-out of its 5G Ultra-Wideband network, deployment of significant fiber assets, and upgradation to Intelligent Edge Network architecture are weighing on profit. Spending on promotion and strategy of offering discounts to beat the competition is further creating a margin squeeze.

End Note

Several factors, including stiff rivalry with T-Mobile and AT&T and various multiservice operators, macroeconomic challenges can impact its financial results. On the positive side, Verizon is currently trading at discounted valuation metrics, and given the company’s strong fundamentals, this might be a favorable entry point. Investors who already own the stock may consider holding on to it, as significant 5G adoption, fixed wireless broadband momentum and strategic partnership with major enterprises to expand its portfolio offerings augur well for long-term growth.

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This article originally published on Zacks Investment Research (zacks.com).

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