Why Verizon Stock Was Up 2.9% Today

What happened

Shares of wireless giant Verizon (NYSE:VZ) rose as much as 2.9% in early trading on Tuesday after reporting earnings. Shares gave back some of those gains and were up 1% at 12:30 p.m. ET.

So what

Revenue fell 3.5% from a year ago to $32.6 billion, but the high-margin services revenue was up from $27.1 billion to $27.3 billion. Verizon actually loses money on equipment revenue, which fell $1.2 billion to $5.3 billion, so the decline in revenue wasn't as bad as it seems.

Total wireless services revenue was up 3.8% to $19.1 billion as 384,000 customers added fixed wireless broadband. Free cash flow also improved from $2.3 billion in the first quarter to $5.7 billion in the second quarter.

That's in part because capital expenditures are falling. Capex was $6 billion in the first quarter and $4.1 billion in the second quarter. It is expected to average about $4.4 billion per quarter in the second half of the year.

Now what

Verizon's cash flow machine is finally starting to turn on. Business wireless plans are growing and broadband is doing well, and that has offset losses in the consumer segment. What management needs to do now is cut spending and debt that has been a weight on the company. If that happens, the stock will slowly recover.

10 stocks we like better than Verizon Communications
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Verizon Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of July 17, 2023

Travis Hoium has positions in Verizon Communications. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.