Verizon 1Q15 Results Beat Earnings Expectations (Part 5 of 5)
Robust growth in Verizon 1Q15 earnings
In the earlier parts of this series, we analyzed the performance of Verizon’s (VZ) wireless and wireline segments in 1Q15. Here, we’ll look at the consolidated profitability of the company during the quarter.
Verizon beat Wall Street estimates on earnings. The telecom company’s adjusted EPS (earnings per share) of ~$1.02 was higher than the the analysts’ consensus estimate of ~0.95 EPS. In both 3Q14 and 4Q14, Verizon reported lower-than-estimated EPS.
Verizon’s adjusted EPS increased by ~21.4% year-over-year during the quarter. However, after adjusting the telecom company’s 1Q14 EPS to account for the Vodafone (VOD) transaction, adjusted EPS growth in 1Q15, year-over-year, was ~12.1%.
Margin assisted by the wireline segment
Verizon’s EBITDA (earnings before interest, tax, depreciation, and amortization) grew ~5.8% year-over-year to ~$11.9 billion in 1Q15. Improvements to the margin contributed to the year-over-year growth in EBITDA this quarter. The telecom company’s consolidated EBITDA margin expanded from ~36.8% in 1Q14 to ~37.4% in 1Q15.
The wireless segment’s EBITDA margin contracted by a slight ~0.1% year-over-year to reach ~44.8% in 1Q15. But, the wireline segment’s EBITDA margin increased from ~22.5% in 1Q14 to ~22.7%. One of the reasons why margins expanded in the wireline segment was an increased contribution from FiOS revenues. FiOS accounted for ~35% of wireline segment revenues in 1Q15, up from ~31% in 1Q14. FiOS is fiber-based and so more efficient than traditional copper-based products.
If you want to get diversified exposure to Verizon, you can invest in the Sector SPDR Trust SBI Interest ETF (XLK). XLK held ~5% in the telecom company on March 31, 2015. You can get more diversified exposure to Verizon by investing in the iShares MSCI ACWI ETF (ACWI). The ETF held ~0.5% in the company on the same date. However, investors should be aware that ACWI also held ~0.4% in AT&T (T) and ~0.01% in Sprint (S).
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