Earnings season continues to deliver surprises - both good and bad. But the market rewarded a telecom giant for another solid quarter while punishing one of the most well-known restaurant chains for falling short yet again. Verizon Communications Inc. (VZ) had a +2.69 reaction score after reporting a double beat, writes Steve Strazza, chief market strategist at AllStarCharts.
It’s a reminder that even in a generally positive earnings backdrop, the reaction often depends more on sentiment and expectations than the raw numbers. VZ reported revenues of $34.5 billion, versus the expected $33.74 billion, and earnings per share of $1.22, versus the expected $1.19.
VZ has now been rewarded for three consecutive earnings reports, rallying 4% after this one. Here's why:
- Q2 consolidated revenue reached $34.5 billion, up 5.2% year-over-year, driven by wireless service and equipment revenue growth.
- They surpassed 5 million Fixed Wireless Access subscribers and posted four consecutive quarters of core prepaid growth.
- Management also raised full-year guidance for adjusted EBITDA, adjusted EPS, and free cash flow.
Technically speaking, the stock is a hot mess. However, the fundamentals are trending in the right direction. With a dividend yield exceeding 6%, we believe this presents an attractive opportunity for income-seeking investors.
The price is in the process of resolving a massive bearish-to-bullish reversal pattern, and the VWAP anchored to the 2019 high is our line in the sand. If and when VZ reclaims $46, the path of least resistance will shift from sideways to higher.
