What Factors Are Impacting Verizon Stock?

Verizon Communications (VZ) closed at $48.03 on February 6, 2017. The stock has fallen 5.8% over the past year.

In contrast, Sprint (S), T-Mobile (TMUS), and AT&T (T) have seen their stock prices rise 193.3%, 71.0%, and 11.3%, respectively, during the past year.

Verizon announced its fiscal 4Q16 and fiscal 2016 results on January 24, 2017. It reported mixed 4Q16 results, which were driven by lackluster wireless margins that are expected to continue. It also led to a disappointing 2017 guidance. The company’s share price took an immediate hit, falling more than 4.0% on January 24, 2017, alone.

Verizon seems to be making the choice of sacrificing margins to retain subscribers until it can differentiate and monetize the base with its 5G (fifth-generation) and digital media strategy. However, the friction will take time, and Verizon expects that wireless service revenue growth will go from negative to positive at the end of 2017 and into 2018.

In 4Q16, Verizon’s earnings were ~3.4% lower than what Wall Street anticipated. Its adjusted EPS (earnings per share) fell ~3.4% YoY (year-over-year) to reach $0.86 on the exclusion of pension remeasurement and severance costs during the quarter.

Verizon stock was also hit by a seven-week work halt due to the strike in its wireline segment in 2016. The strike impacted EPS by $0.07 in 2Q16. The company suffered from a backlog of FiOS installations due to the strike.