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Telecommunications giant Verizon (NYSE:VZ) reported Q4 CY2024 results beating Wall Street’s revenue expectations , with sales up 1.6% year on year to $35.7 billion. Its non-GAAP profit of $1.10 per share was in line with analysts’ consensus estimates.

Is now the time to buy Verizon? Find out in our full research report.

Verizon (VZ) Q4 CY2024 Highlights:

• Revenue: $35.7 billion vs analyst estimates of $35.34 billion (1.6% year-on-year growth, 1% beat)

• Adjusted EPS: $1.10 vs analyst estimates of $1.10 (in line)

• Adjusted EBITDA: $11.93 billion vs analyst estimates of $12.04 billion (33.4% margin, 1% miss)

• Free Cash Flow Margin: 15%, up from 11.6% in the same quarter last year

• Market Capitalization: $164.9 billion

Company Overview

Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.

Wireless, Cable and Satellite

The massive physical footprints of cell phone towers, fiber in the ground, or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their landlines and traditional cable subscriptions in favor of wireless communications and streaming video. These trends do mean that more households need cell phone plans and high-speed internet. Companies that successfully serve customers can enjoy high retention rates and pricing power since the options for mobile and internet connectivity in any geography are usually limited.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Verizon struggled to consistently increase demand as its $134.8 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and signals it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Just like its five-year trend, Verizon’s revenue over the last two years was flat, suggesting it is in a slump.

This quarter, Verizon reported modest year-on-year revenue growth of 1.6% but beat Wall Street’s estimates by 1%.

Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

Cash Is King

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Verizon has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 14.3% over the last two years, better than the broader consumer discretionary sector.

Verizon’s free cash flow clocked in at $5.36 billion in Q4, equivalent to a 15% margin. This result was good as its margin was 3.4 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends are more important.

Key Takeaways from Verizon’s Q4 Results

Overall, this was a roughly in line quarter, with no major surprises. Revenue beat by a small amount, EBITDA missed by a small amount, and EPS met Wall Street's expectations. The stock remained flat at $39.48 immediately after reporting.

Should you buy the stock or not? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.