Shares of Verizon Communications (VZ 1.17%) were surging today after the telecom giant topped estimates in its third-quarter earnings report and raised its guidance for the year.
The report seemed to show that Verizon was finally turning the page after a long string of disappointing results and underperformance.
As of 12:21 p.m. ET, the stock was up 8.7%, giving it its best one-day gain since 2020.
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Verizon crushes the consensus
The company showed strength in the broadband and business segment. It continued to lose consumer subscribers, but the pace of its decline improved.
Overall revenue fell 2.6% to $33.3 billion as wireless equipment revenue continued to decline, but wireless service revenue rose 2.9% to $19.3 billion. The overall revenue number topped the consensus at $31.4 billion.
The company added 100,000 postpaid net phone accounts with strength coming from its business division, where it added 151,000 postpaid net phone accounts. However, the consumer segment was weak, with wireless postpaid phone net losses of 51,000, though that was an improvement from both the second quarter and the quarter a year ago.
On the bottom line, net income declined 2.8% to $4.9 billion, and adjusted earnings per share (EPS) slipped from $1.32 to $1.22, which was still ahead of estimates at $1.11.
CEO Hans Vestberg said, "We continued to make steady progress in the third quarter with a clear focus on growing wireless service revenue, delivering healthy consolidated adjusted EBITDA, and increasing free cash flow."
Is the worst over for Verizon?
In addition to the better-than-expected performance in the third quarter, the company raised its guidance for the year, calling for free cash flow of $18 billion, $1 billion higher than its previous guidance. It also maintained its adjusted EPS guidance of $4.55 to $4.85, and wireless service revenue growth of 2.5% to 4.5%.
With strong results from both AT&T and Verizon now, it seems like the worst is behind the telecom giants even as revenue and profits are still falling at Verizon. These still aren't thriving businesses, but they have stabilized and the stock prices have gotten so cheap that it doesn't take much to give them a boost.
Verizon currently offers a 7.8% dividend yield after today's jump, and the stock could move higher in the coming days as analysts revise their estimates higher and possibly upgrade the stock.
