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Verizon’s Revenue Will Likely Grow Marginally in 2Q15

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Wall Street on Verizon’s revenue

In the last part of this series, we learned that Wall Street expects Verizon (VZ) to report solid earnings growth in 2Q15. Now, we’ll delve into the core fundamentals of the company to find out the rationale behind Wall Street’s optimism on Verizon’s results for the quarter. In this part, we’ll look at Verizon’s top line. According Wall Street analysts’ consensus as of July 10, 2015, there will be low growth in Verizon’s revenue during 2Q15. Analysts expect Verizon’s revenue to rise ~3% YoY (year-over-year) to ~$32.4 billion during the quarter.

As you can see in the above chart, Wall Street analysts’ expectations were largely in line during the last four quarters that Verizon reported its results.

Verizon’s revenue in 1Q15

Verizon’s revenue rose modestly by ~3.80% YoY to reach ~$32 billion in 1Q15. Verizon’s wireless segment performed well during the quarter. The telecom company’s wireless revenue grew ~6.90% YoY to ~$22.3 billion in 1Q15. However, the wireline segment continued to dampen the telecom company’s revenue growth.

The wireline segment’s revenue fell by ~2% YoY to reach ~$9.5 billion in 1Q15. The wireline telecoms—including Verizon, AT&T (T), CenturyLink (CTL), and Windstream (WIN)—continue to face the trend of customers migrating from voice telephony and other legacy services. Also, the shrinking base of these legacy services negatively affects the overall growth of the wireline telecom industry.

You can get exposure to Verizon while diversifying risk by investing in the iShares Russell 3000 ETF (IWV) or the iShares U.S. Telecommunications ETF (IYZ). IWV held ~0.80% in the telecom company as of June 30, 2015. Verizon contributed to ~10.40% of IYZ’s holdings on the same date.

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