Telecom heavyweight Verizon Communications (NYSE: VZ) is set to face the music with its fourth quarter earnings report before the bell on Monday. Let's listen in and hear what the company has to say now.

What analysts say:

  • Buy, sell, or waffle? A total of 29 analysts follow Verizon, and this group is almost evenly split along the buy/hold line -- 13 say buy while 15 say hold shares (a lone analyst says sell). In the Motley Fool CAPS community, 1,538 investors rating the company give it a collective four-star rating (out of five possible).
  • Revenues. On average, analysts see revenue of $24 billion this quarter, up 6% from last year.
  • Earnings. Analysts project earnings of $0.62 per share, essentially flat when compared to last year.

What management says:
Verizon's management team has been glowing lately, trumpeting broad success against tough competitors -- such as AT&T (NYSE: T) and Sprint Nextel (NYSE: S) -- as well as improvements in its business operations. While everyone knows it's been a little easier stealing Sprint Nextel's wireless customers lately, COO Denny Strigl noted that even with AT&T's success in selling the Apple (Nasdaq: AAPL) iPhone, "we don't see any major impact [from the device] on our business."

What management does:
Even though one quarter does not a trend make, improvements in the operating structure of Verizon appear to be taking hold. Verizon saw a significant uptick in operating margins last quarter, and the drop in net income is explained by a bigger tax burden in the quarter.

Margins

6/06

9/06

12/06

3/07

6/07

9/07

Gross

61.8%

60.5%

60.3%

60.5%

60.5%

60.4%

Operating

16.3%

15.6%

16.1%

16.5%

16.8%

17.2%

Net

8.8%

8.4%

7%

6.8%

6.7%

5.9%

Data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Verizon's wireless business -- which it operates with partner Vodafone (NYSE: VOD) -- continues to blaze ahead and leave lesser competitors Sprint Nextel and Deutsche Telekom's (NYSE: DT) T-Mobile in the dust. But its wireline business is showing strong performance as well. Traditional wired telephony is losing steam, but the company's broadband and enterprise services are more than making up for those declines, as well as contributing to margin improvements.

The only problem with Verizon is its high valuation. Although a current dividend yield of 4.7% is tempting, Verizon's current P/E of 20 makes it a rich alternative to its peers. I expect Verizon to again report exceptional operational performance this quarter, but I see little upside in shares priced with that expectation in mind.

For more telecom Foolishness:

Sprint Nextel was selected by the Motley Fool Inside Value team for its great prospects at a bargain price. To see the full list of companies, take a free, 30-day trial.

Fool contributor Dave Mock is a sucker for a dangling carrot. He owns no shares of companies mentioned here, and is the author of The Qualcomm Equation. The Fool's disclosure policy limits consumption to safe daily intake levels.