Investing.com - Verizon Communications (NYSE:VZ) raised its guidance for the year fractionally after a solid third quarter that saw its decline in revenue ease thanks to success in attracting new business customers for its wireless service.
Adjusted earnings per share for the three months through September were a touch ahead of expectations at $1.25, compared to a forecast of $1.22, but reported earnings were lower after the company took a $1.1 billion charge to mark its pension liabilities to market.
Revenue fell 4.1% on the year, a slight improvement on the 5.1% drop reported in the second quarter but below expectations. The improvement was due largely to its success in attracting new business customers to its wireless service: Verizon gained 417,000 new business accounts in the quarter, up from 280,000 in the second quarter. In all, net new subscribers rose by 553,000, more than double consensus forecasts ahead of time, although the company’s churn rate also edged up.
Verizon said it now expects full-year earnings per share to be in a range between unchanged and up 2% from a year earlier. The mid-point of 1% is one percentage point higher than previously, while the range has narrowed from -2% to 2%.
It also said it expects total wireless service revenue to be up at least 2% from last year in the fourth quarter.
Verizon shares are down 6% from the beginning of the year, and down 8% from their 52-week high of $62.22 set on December 20, 2019. They are under-performing the S&P 500 which is up 6.6% from the start of the year.
Verizon shares gained 1.9% in pre-market trade following the report.
"Telecoms may not provide hefty capital gains such as those delivered by high-flying, more volatile technology stocks, but the downside risk during times of distress is also limited," said Investing.com analyst Haris Anwar. "With its strong balance-sheet, growing dividend, and leading position in the 5G rollout, Verizon is well-positioned to recover from the pandemic-triggered downturn. It’s also a solid—and comparatively safe— dividend stock for long-term investors looking to shield their portfolios from ongoing market volatility."
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