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Verizon - a solid year, but limited progress expected

George Salmon | 30 January 2019 | A A A
Verizon - a solid year, but limited progress expected

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No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Verizon Communications Inc Com Stk US0.10

Sell: 57.46 | Buy: 57.47 | Change 0.20 (0.35%)
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Verizon's 2018 reported operating profit has fallen 18.8% to $22.3bn. However, that mostly reflects the $4.6bn impairment in Oath (the media arm including Yahoo and AOL).

Earnings per share (adjusted to exclude one off items such as the Oath impairment and the non-recurrence of last year's tax benefit) rose from $3.74 last year to $4.71.

Looking ahead, the group expects a slight increase in revenue next year, but no improvement in adjusted earnings per share.

The shares fell 3.1% in pre-market trading.

The quarterly dividend was $0.6025 per share, up from $0.59 last year.

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Q4 results summary

Wireless total retail connections increased 1.5% to 118m over the year, which helped adjusted annual revenue rise 4.4% to $91.3bn. However, Q4 rose just 2.1% to $24.3bn as better service revenues were offset by weaker equipment sales.

Fourth quarter cash profits as measured by adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 3.2% to $9.8bn.

2018 Wireline revenues fell 3% to $29.8bn, with Q4 down 3.2% to $7.4bn. That came as growth in Fios, the group's fibreoptic internet, TV and phone service, was offset by falling voice and internet connections.

Lower revenue and a small increase in operating costs sent Wirelines' Q4 underlying EBITDA down from $1.6bn to $1.2bn. After including depreciation and amortisation, that translates to a $273m operating loss in Q4, and the full year.

Net debt decreased by $4.7bn to $11.3bn during 2018 as operating cash flow improved. Capital expenditures fell slightly to $16.7bn.

The group reduced costs by $2.3bn during 2018, and says it is on track to deliver $10bn in savings by 2021.

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Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.