The Verizon stock price rose on Wednesday after the company published the relatively strong quarterly results. The shares rose to a session high of $56.82 and then erased some of those gains. The stock is still about 6.50%, below the highest point this year.
Verizon is a large American telecommunication company valued at more than $231 billion. The company published its quarterly results that beat consensus estimates on Wednesday. The total consumer sales rose by 11% to $23.5 billion in the quarter. This growth was mostly because of the wireless equipment revenue.
Its total wireless revenue came in at more than $16.9 billion, which was a 5.9% increase. As a result, the firm’s net income came in at more than $5.9 billion, while its adjusted EBITDA was more than $12.2 billion. The free cash flow for the first half of the year was $20.4 billion. This was a decline from the previous $23.6 billion. The firm attributed this decline to higher taxes and working capital spending.
Other highlights in Verizon’s earnings were that it added more than 528,000 postpaid customers in the quarter. This increase led to more than 121.3 million total retail additions. The management also talked about the recent decision to sell its Verizon Media Group to Apollo Global Management. The division included old web brands like Yahoo and AOL.
The Verizon stock price rose because of the company’s strong forward guidance. It expects its total wireless revenue to grow by between 3.5% to 4%. It also sees its adjusted EPS rising to between $5.25 to $5.35 while capital spending is seen to rise to about $18.5 billion.
Is the Verizon stock a buy?
Verizon is a popular company, especially among dividend-focused investors. They appreciate its 4.5% dividend yield that is backed by a strong payout ratio of about 48%. This means that the company can cover its payout comfortably. While it has a substantial debt load, the firm will likely not slash its dividend like AT&T did early this year.
The company has a brand presence across the country and has a diversified portfolio. As a result, many analysts are optimistic that the firm can continue providing quality returns over the years. Data compiled by Marketbeat shows that most analysts who follow the company have a buy rating on it.
The average price target is $61, which is about 10% above the current price. Analysts at Tigress Financial, Cowen, HSBC and Moffet Nathanson have a buy rating with an average target of more than 60. Those at Redburn Partners are bearish on Verizon.
Verizon has a relatively cheap valuation. It has a trailing PE ratio of about 10, which is lower than that of peer companies like Deutsche Telekom and BCE. This is despite the fact that it has higher margins and growth.
Verizon stock price analysis
The daily chart shows that the Verizon stock price formed a double-top pattern at around $60 early this year. Its neckline was at $56.25. A double-top is usually a sign of potential reversal. It has also moved below the 50-day and 25-day Moving Average, while the two lines of the MACD are below the neutral line.
Therefore, there is a possibility that the stock will break out lower because it is hovering at the neckline of the double bottom pattern. If this happens, we can expect the price to move below $50.