Editor's note: This article has been corrected. Verizon is scheduled to report earnings on Oct. 29.
Verizon Communications (VZ 0.42%) just can't seem to catch a break. Even though shares of the telecom giant offer a high yield and the valuation looks low, investors have been bearish in recent years. And this year, while the overall market has risen, the stock has remained flat. The company recently made a big move -- changing its CEO -- but that only sent the stock lower.
Meanwhile, Verizon reports its third-quarter earnings on Oct. 29. With some significant news and plenty of spotlights on the business of late, a low valuation, and earnings on deck, could now be the time to finally buy this struggling stock?
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Verizon's moves on earnings day are usually modest
There's normally a lot of predictability and long-term stability when it comes to Verizon's business. Customers rely on its internet services on a regular basis, and so there's a high degree of recurring revenue. There may be some churn along the way, but this isn't a business you would expect to see huge growth from.
Its historical price movements on earnings day are reflective of that pattern. Since 2024, the stock has largely stayed within a narrow range, normally hovering somewhere between $40 and $45.
While an earnings report can sometimes lead to a stock's sudden fall or rise, that generally hasn't been the case with Verizon. The stock did make a big move recently, however, that was due to a change in leadership.
Verizon appoints a new CEO
On Oct. 6, Verizon announced that former PayPal CEO Dan Schulman would now be its leader. Schulman takes over from Hans Vestberg, who had been in charge since 2018. The move caught investors by surprise, and the stock suffered one of its largest single-day declines of the year, falling by just over 5%.
The company's shares have declined by more than 30% in five years, and its board may have been looking for a way to change things up. Investors, meanwhile, may be questioning such a big and unexpected move happening so closely to the release of the upcoming earnings report. Many have likely been dumping the stock in anticipation of some troubling results in the current quarter.
In the press release announcing the CEO move, however, management said that Schulman was simply "the right leader to chart Verizon's next phase of increased customer focus and financial growth."
The company has been generating just modest single-digit growth of late. However, with the economy being far from ideal and consumers cutting back on discretionary purchases, such as new phone upgrades, there may not be a quick or easy way to improve its growth rate without having to lower prices and sacrifice margins in the process.
Why I'd buy Verizon
Verizon is struggling at a time when I would expect it -- when the economy isn't strong. But the telecom provides products and services that businesses and consumers need on a daily basis, and it's a stable business to invest in. It also generates strong profit margins of around 13%, and offers an attractive dividend that yields just under 7%.
While I don't expect the stock to suddenly surge in value after it reports earnings, I think now can be a great time to invest in it given its reduced valuation. It trades at a price-to-earnings multiple of just over 9 (by comparison, the S&P 500 average is more than 25).
Although Verizon is facing some challenges these days, in the long run, this leading telecom provider can still be a strong income-generating investment to hang on to for years to come.
