Verizon (NYSE:VZ) seems to be following in the footsteps of AT&T (NYSE:T) as the stock has been continuing on its recovery trend. VZ stock is up over 5% after revenue rose 5.2% year-over-year to $34.5 billion. Adjusted EPS hit $1.22, and both figures are above analyst consensus estimates.
5.2% revenue growth seems too got to be true for a mature telecom business, but with AI megatrends causing a data center boom, internet networks are much more important. Not only that, they are starting to be considered essential by Wall Street. Earnings have held up better than expected, and these companies have been able to deal with high interest rates and pay high yields despite crushing debt.
Verizon’s stellar Q2 earnings report
Management lifted its full-year free-cash-flow guidance to a range of $19.5 billion to $20.5 billion, up from the prior $17.5 billion to $18.5 billion. VZ stock looks less like a defensive play and seems set to accelerate growth.
The company still lost postpaid phone customers, but the 51,000 that walked away is the smallest quarterly decline in a year. Meanwhile, prepaid added 50,000 and broadband tacked on 293,000 net new accounts. Most of those broadband additions came from fixed wireless access, the 5G-powered home internet product that is turning out to be Verizon’s stealth weapon against cable.
Verizon says its fiber and C-band deployments are running ahead of schedule, which should keep both mobile and home internet speeds in front of rivals.
I believe VZ stock still has 40%-plus upside potential from here. A full recovery will be even more likely if interest rate cuts come on schedule and ease the debt servicing burden. You are paid a 6.31% dividend yield to wait out that recovery.
— Omor IE
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Source: Money Morning
