This Could Be The Last Time To Buy Verizon Below $54 We've liked Verizon (NYSE: VZ) for quite some time and let us count the ways. To start, the company is a pure-play on mobile, wireless, and Internet that pays a...

Verizon Beats And Guides Higher

We've liked Verizon (NYSE: VZ) for quite some time and let us count the ways. To start, the company is a pure-play on mobile, wireless, and Internet that pays a very high yield while trading at a deep discount to the broad market. Sure, Verizon and the telecom industry have had hurdles but those hurdles are long behind them, Verizon specifically, and the outlook for growth and profits positive. We were interested buyers in the stock last year, all the way down to the $50 level where it has since bounced and put in a bottom. Now, with the stock in reversal and poised to move higher it is offering up one last chance to get in before the rally starts in earnest and it may be a long and protracted one at that.

"2021 was a transformational year for Verizon that will serve as a catalyst for us," said Verizon Chairman and CEO Hans Vestberg. "We delivered on all of our goals in 2021 and made great progress on our five paths of growth, finishing the year with strong operating and financial momentum. As we move into 2022, we have the necessary assets to realize our strategy that we laid out in 2019. We are laser focused on executing our 5G strategy and providing value to our customers, shareholders, employees, and society, as 2022 will be the most exciting year yet for Verizon."

Verizon Falls On Better Than Expected Earnings

Shares of Verizon are down in the wake of better than expected earnings but that is due more to the broader market sell-off than anything else. The Q4 results are not only strong but come with upside guidance that we feel is cautious given the growing momentum in 5-G. The company reported $34.1 billion in net revenue from continuing operations for a gain of 4.8% over last year and beat the Marketbeat.com consensus estimate by 37 basis points. The 37 basis point beat isn't all that impressive but it does reveal some underlying strength in the market. On a segment basis, the company reports a 6.6% increase in net wireless service revenue driven by ARPC and volume increases with a churn of only 1.01%. Customer counts grew in both of the Internet service segments as well.

Moving down the report, the company was able to sustain margin strength and grow earnings on the bottom line. The company's GAAP earnings of $1.11 are flat YOY but there are non-cash impairments to be aware of. The company began to amortize intangible assets which had and will have an impact on earnings. This year that impact was just over a dime so on an adjusted basis, including other factors, the $1.31 in reported earnings is up 8.3% from last year and beat the Marketbeat.com consensus estimate by $0.03.

High-Yield, Deep Value Verizon Is In Reversal

Price action in Verizon is down following the Q4 results but the move is mild compared to the broader market and it is meeting with support. That is not surprising given Verizon's PE of 9X earnings and dividend yield of 4.8% compared to the S&P 500's higher 20X earnings and 1.30% yield, a difference that we see driving a reversal in price action. The price action over the last four months is forming a Head&Shoulders that we see leading the stock up the $59 level and then possibly higher. The risk now is that price action will fall below the 30-day moving average where it may become range-bound. Regardless, the yield and outlook for Verizon is robust so we are expecting higher prices within the next 12 months if not sooner.