What Are the Expectations for Verizon’s Revenue Growth in 1Q16?



Verizon’s revenue in 1Q16

In the previous part of this series, we delved into Wall Street analysts’ expectations on the growth of Verizon’s (VZ) earnings for 1Q16. The telecom company will report these results on April 21, 2016.

Wall Street expects marginal growth in Verizon’s revenue during 1Q16. According to the consensus analyst estimates, Verizon’s revenue is projected to grow by ~1.7% year-over-year to ~$32.5 billion for 1Q16.

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Consensus versus actual performance

As we can see in the above chart, Verizon beat Wall Street analysts’ revenue estimates in both 4Q15 and 3Q15. However, in 1Q15 and 2Q15, Verizon’s revenue was lower than expected by these analysts.

Verizon’s revenue in 4Q15

In 4Q15, Verizon’s revenue increased by ~3.2%% year-over-year (or YoY) to ~$34.3 billion. Excluding AOL’s impact, the carrier’s revenue growth was mostly flat during the quarter. Verizon acquired AOL in June 2015. Verizon’s revenue, adjusted for AOL’s operations, increased by only ~0.5% YoY to ~$33.4 billion during 4Q15.

During 4Q15, Verizon experienced shrinking wireline revenues and lackluster performance in its Wireless segment. The Wireless segment’s revenue increased by ~1.2% YoY to ~$23.7 billion during the quarter.

The Wireless segment’s postpaid ARPA (average revenue per account) fell by ~6.6% YoY in 4Q15. Verizon had the largest postpaid base among the top four US wireless players at the end of 4Q15. Verizon’s peers are AT&T (T), T-Mobile (TMUS), and Sprint (S).

The Wireline segment’s revenue fell by ~0.9% YoY to reach ~$9.5 billion during 4Q15. This decrease came mostly from the segment’s Global Enterprise component. This stream fell by ~3.3% YoY to ~$3.2 billion during the quarter.

Instead of taking direct exposure to Verizon’s stock, you may consider a diversified exposure to the company by investing in the SPDR Dow Jones Industrial Average ETF (DIA). DIA held ~2.1% in the telecom company at the end of March 2016.


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