The economic downturn and inflationary pressures have driven Wall Street into a bear market, a condition that is likely to continue in the near future. As a result, investors are drawn to stable companies that offer relatively safe investment options. Naturally, the market’s approach to weak performers like Verizon Communications Inc. (NYSE: VZ) has been skeptical this year.
Currently, VZ is one of the worst-performing stocks, losing more than 30% in the past six months. Though recovery from the multi-year lows is inevitable, the underlying weakness and challenging market conditions call for caution. In short, it might not be the right time to buy/sell Verizon shares, rather it makes sense to keep an eye on the stock through next week’s earnings announcement, which is expected to provide fresh updates on the business.
A Better Buy?
That said, Verizon continues to dominate the wireless retail market, in terms of the strength of customer base, outperforming rivals T-Mobile US, Inc. (NASDAQ: TMUS) and AT&T Inc. (NYSE: T). That, combined with the company’s undivided focus on the core business, unlike others, makes it an investment worth considering. The stock has become cheaper after the recent losses and the company’s earnings performance has been consistent, which shows it is a better investment option for the long term.
Verizon Communications Inc. Q2 2022 Earnings Call Transcript
In the second quarter, adjusted profit missed estimates, after beating regularly for over two years. Earnings also declined 6% year-over-year to $1.31 per share. Revenues remained unchanged at $33.8 billion and came in slightly above the forecast. Taking a cue from the weak bottom-line performance, the management slashed its full-year forecast.
Outlook
During an interaction with analysts, Verizon’s CFO Matt Ellis exuded confidence in the management’s long-term growth strategy, though the latest numbers failed to meet expectations. According to him, there is intense competition for consumer attention, mainly due to inflationary pressures, but the continuing strong momentum would allow the company to improve performance over the long term.
“In our Consumer Group, we have consistently pursued a disciplined strategy of offering high-quality services at competitive prices,” he added.
Earnings
The firm bets on its network-as-a-service model, consumer mobility plans, and positive pricing actions to ‘improve profitable growth opportunities going forward. When Verizon reports third-quarter results on October 21 in the pre-market hours, the market will be looking for a 9% drop in adjusted earnings to $1.28 per share, on revenues of $33.81 billion.
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The unimpressive second-quarter report added to VZ’s losses, and the stock maintained a downtrend since then. However, the shares traded slightly higher early Wednesday, after closing the previous session lower.
