Verizon Communications (VZ) Stock Slides as Market Rises: Facts to Know Before You Trade

Verizon Communications (VZ) stock decreased by 0.61% in the latest trading session, underperforming the S&P 500's daily gain; however, analysts forecast a 2.61% EPS increase to $1.18 and a 2.13% revenue increase to $33.49 billion for the upcoming earnings release. Full-year estimates project a 2.18% increase in earnings per share to $4.69 and a 1.71% increase in revenue to $137.09 billion, while the stock currently holds a Zacks Rank #3 (Hold) and trades at a forward P/E of 9.4, a discount compared to its industry's 21.36.

Analysis

Verizon Communications (VZ) recently closed at $43.83, marking a 0.61% decline, and underperformed major market indices; its 1.29% gain over the past month also significantly lagged both the S&P 500's 4.61% rise and the Computer and Technology sector's 7.05% increase. Despite this recent market underperformance, consensus forecasts for its upcoming earnings report are moderately positive, anticipating an earnings per share (EPS) of $1.18, reflecting a 2.61% year-over-year increase, and revenue of $33.49 billion, up 2.13% from the prior-year quarter. Full-year Zacks Consensus Estimates project an EPS of $4.69 (+2.18% YoY) and revenue of $137.09 billion (+1.71% YoY), further supported by a slight 0.02% upward revision in the Zacks Consensus EPS estimate over the past month, indicating some analyst optimism. Verizon currently holds a Zacks Rank #3 (Hold). From a valuation standpoint, VZ trades at a forward P/E ratio of 9.4, which represents a substantial discount compared to its industry's average forward P/E of 21.36. Its PEG ratio of 3.27 aligns with the Wireless National industry average; however, this industry is ranked in the bottom 42% by Zacks Industry Rank (145 out of 250+), suggesting potential broader sector headwinds.

Key Decisions for Investors

• Investors should closely monitor Verizon's upcoming earnings release to ascertain if the forecasted modest growth in EPS (2.61%) and revenue (2.13%) materializes, as this will be crucial for sentiment given the stock's recent underperformance relative to the market.
• The current forward P/E ratio of 9.4 presents a notable discount to the industry average, which may attract value-oriented investors; however, this should be weighed against the Zacks Rank #3 (Hold) status and the relatively weak Zacks Industry Rank of the Wireless National sector.
• Consider the implications of the slight upward revision in consensus EPS estimates (0.02% over the past month) as a potential, albeit minor, positive catalyst, while remaining cognizant of the stock's lag against its sector and the broader market performance.