Verizon Is Down By 6%, Here Is Why

Key Insights

• • Verizon’s Q1 2022 report met analyst estimates, but the company’s guidance was disappointing. 
  • The stock is trading at 9 forward P/E, but current levels do not look cheap due to the company’s slow growth. 
  • Rising yields make Verizon’s dividend yield less attractive. 

Verizon Stock Falls As Full-Year 2022 Guidance Disappoints

Shares of Verizon found themselves under strong pressure after the company released its first-quarter report. Verizon reported revenue of $33.6 billion and adjusted earnings of $1.35 per share, in line with the analyst estimates.

While the report met analyst estimates, it failed to provide support to Verizon stock as traders focused on the company’s guidance for the full-year 2022.

Verzon expects that its wireless service revenue growth would be at the lower end of the previously guided range of 9% – 10%. Adjusted EBITDA is expected to grow at the lower end of the 2% – 3% range, while adjusted EPS is projected to be at the lower end of the previously guided range of $5.40 – $5.55.

What’s Next For Verizon Stock?

Currently, analysts expect that Verizon will report earnings of $5.45 per share in 2022 and earnings of $5.62 per share in 2023, so the stock is trading at 9 forward P/E.

However, analyst estimates will likely move lower after the company said that its 2022 earnings would be close to the $5.40 level. Investors questioned the company’s ability to grow its revenue and earnings at a robust pace, and the stock has been under pressure since the end of 2020.

The recent report highlights Verizon’s problems, and it remains to be seen whether speculative traders will rush to buy the company’s shares after the pullback. While the current valuation levels may look cheap, the company’s slow growth could hurt the stock even more. In addition, the company’s dividend yield has become less attractive in the rising interest rate environment.

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