Verizon Communications Inc. shares were rocketing toward their best day in 15 years Tuesday after the company saw growth in its subscriber metrics and boosted its free-cash-flow outlook for the year.
Shares of Verizon
VZ,
were ahead 8.2% in morning action and on track for their largest single-day percentage gain since Oct. 28, 2008, when they surged 14.6%, according to Dow Jones Market Data.
“Our targeted and segmented market approach also served us well during the iPhone 15 launch, and we continue to execute with an eye towards meeting our customers’ needs while maintaining a disciplined approach,” Chief Executive Hans Vestberg said on the company’s earnings call, according to a transcript provided by AlphaSense/Sentieo.
He noted that the company’s “competitive position is now stronger,” as Verizon posted positive consumer postpaid phone net additions in the month of September. “We anticipate that momentum will continue as we’re on track to exceed our postpaid phone net adds from [the fourth quarter] of last year,” Vestberg said.
Overall, the company notched a net gain of 100,000 postpaid phone subscribers in the third quarter. Total retail postpaid phone churn was 0.9%.
The telecommunications giant reported net income of $4.9 billion, or $1.13 a share, compared with $5 billion, or $1.17 a share, in the year-earlier period. On an adjusted basis, Verizon earned $1.22 a share, whereas the FactSet consensus was for $1.18 a share.
Revenue fell to $33.3 billion from $34.2 billion and matched the FactSet consensus. The company reported $25.3 billion in revenue from its consumer business and $7.5 billion in revenue from its business unit.
Verizon switched up its plans back in May, simplifying the array of offerings while letting consumers customize their add-on services.
The company now expects more than $18 billion in free cash flow for the full year, up by $1 billion relative to the prior target. Free cash flow is a notable metric for Verizon investors due to the company’s dividend obligations.
“Strong free cash flow provides flexibility and enables us to deliver on our capital-allocation priorities,” Chief Financial Officer Tony Skiadas said on the earnings call.
Verizon also anticipates that capital spending will fall at the higher end of the company’s previously guided range, which was for $18.25 billion to $19.25 billion.
“We believe results reinforce a stabilizing wireless competitive environment, lower upgrade rates, and better FCF prospects for Verizon,” Citi Research analyst Michael Rollins said in a note to clients.
The company’s commentary on free cash flow struck him as “encouraging, especially since Verizon is absorbing higher cash interest expense within the definition of FCF (and EPS) since the level of capitalized interest is declining faster from early activation of the C-band spectrum.”
The results from Verizon come after peer AT&T Inc.
T,
delivered an upbeat report last week, boosting its free-cash-flow outlook for the full year and racking up 468,000 postpaid phone net additions. T-Mobile US Inc.
TMUS,
delivers results Wednesday morning, while cable giants Comcast Corp.
CMCSA,
and Charter Communications Inc.
CHTR,
which have gotten into the wireless business through a mobile virtual network operator model that leverages Verizon’s network, report Thursday and Friday mornings, respectively.
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