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Why Investors Reacted Negatively to Verizon’s Q4 Earnings

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Verizon’s fourth-quarter results

Verizon Communications (VZ) reported its fourth-quarter earnings results on January 29. The company’s earnings beat the consensus Wall Street estimate by ~2.8% in the fourth quarter. Verizon’s adjusted EPS rose ~30.2% YoY to reach $1.12 in the fourth quarter. However, excluding the net effects of tax reform and the adoption of the new revenue recognition accounting standard, Verizon’s adjusted EPS rose ~4.7% YoY to reach $0.90 in the fourth quarter.

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Verizon’s consolidated adjusted EBITDA increased by ~8.4% YoY to reach $11.6 billion in the fourth quarter. The telecom company’s wireless segment’s EBITDA increased by ~9.7% YoY to reach $10.4 billion in the fourth quarter. Meanwhile, the wireline segment’s EBITDA fell ~18.6% YoY to reach $1.3 billion.

Stock price reaction

Verizon stock reacted negatively to the company’s fourth-quarter earnings report, falling ~3.3% on January 29. Investors were disappointed, as the company missed the consensus revenue estimate by $163 million. In the fourth quarter of 2018, Verizon reported net revenues of $34.3 billion, a YoY rise of 1.0%.

That day, telecom peers T-Mobile (TMUS) and AT&T (T) rose ~0.2% and ~0.1%, respectively. Meanwhile, Sprint (S) stock fell ~0.2% on January 29.

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