Verizon Communications (VZ) Stock Sinks As Market Gains: Here's Why

In the latest close session, Verizon Communications (VZ) was down 1.31% at $50.45. The stock's change was less than the S&P 500's daily gain of 0.83%. At the same time, the Dow added 0.5%, and the tech-heavy Nasdaq gained 1.38%.

Shares of the largest U.S. cellphone carrier have appreciated by 10.39% over the course of the past month, outperforming the Computer and Technology sector's loss of 3.51%, and the S&P 500's loss of 2.65%.

Market participants will be closely following the financial results of Verizon Communications in its upcoming release. The company is expected to report EPS of $1.23, up 3.36% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $34.75 billion, up 3.79% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $4.91 per share and a revenue of $143.23 billion, representing changes of +4.25% and +3.64%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Verizon Communications. These revisions help to show the ever-changing nature of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.76% increase. Verizon Communications currently has a Zacks Rank of #3 (Hold).

In terms of valuation, Verizon Communications is currently trading at a Forward P/E ratio of 10.4. This denotes a discount relative to the industry average Forward P/E of 16.92.

We can also see that VZ currently has a PEG ratio of 2.15. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. As the market closed yesterday, the Wireless National industry was having an average PEG ratio of 1.79.

The Wireless National industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 212, placing it within the bottom 14% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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