Verizon VZ is set to report its second quarter fiscal 2020 financial results before the opening bell on Friday, July 24. VZ is expected to take a near-term coronavirus hit even though it operates a relatively stable and defensive business.

But Verizon is in the midst of its 5G rollout, it completed its acquisition of a Zoom ZM challenger back in May, and some of its other fundamentals might make it an attractive pick during the pandemic and beyond.

The Quick Story

Verizon is the largest U.S. wireless carrier by subscribers, just ahead of rival AT&T T. Verizon, AT&T, and T-Mobile TMUS are all currently working to implement and expand their nascent 5G networks. All of the networks are, however, relatively small despite the broader and hyperbolic marketing pitches.

Verizon will nonetheless play a key role in the next-generation of high-speed wireless that consumers and businesses have been anticipating for a few years. But the implementation is capital intensive, which might favor VZ as it hasn’t taken on a ton of debt to fuel expansion into new industries like AT&T has in its push to become a media powerhouse to take on Netflix NFLX and others.

That said, VZ in May officially closed its deal to buy cloud-based video conferencing firm BlueJeans. The move helps expose the firm to the remote-work space, alongside Microsoft MSFT, Zoom, and others that might continue to grow even when the coronavirus is behind us.

And the wireless firm announced in mid-July a collaboration with IBM IBM to help enable “the future of industry in the Fourth Industrial Revolution.”

Other Fundamentals

Verizon topped our Q1 earnings estimate in late April. But the telecom powerhouse’s revenue dipped 1.6%, as the pandemic impacted its core wireless business. VZ also lowered its profit guidance and pulled its revenue outlook amid the uncertainty. And Verizon raised its bad-debt reserves to help account for customers who won’t be able to pay their bills.

With this in mind, Verizon shares are down roughly 8% in 2020, which looks far better than AT&T’s 23% decline. VZ has lagged the market’s comeback since March 24, up only 14%. Yet this could give Verizon room to run, while many of the biggest tech names might have a harder time living up to the expectations that their massive coronavirus climbs likely warrant.

Verizon is currently trading at 1.7X sales, which comes in below the S&P 500’s average and its own 12-month highs. Furthermore, VZ’s 4.41% dividend yield crushes the 10-year U.S. Treasury’s 0.61%, the S&P 500’s 1.76% average, and high-yield tech stocks such as Cisco CSCO, Broadcom AVGO, and HP Inc. HPQ.

Bottom Line

Our current Zacks estimates call for Verizon’s adjusted second quarter earnings to fall 5.7% to $1.16 per share on 6.7% lower sales, which looks better than the broader S&P 500’s expected downturn.

Verizon is currently a Zacks Rank #3 (Hold) that has topped our quarterly earnings estimates in three out of the last four quarters. VZ also earns “B” grades for both Value and Growth, alongside an “A” for Momentum in our Style Scores system.

In the end, playing stocks around earnings is never easy and this quarter might be even harder given the coronavirus uncertainty that could further impact guidance.

That said, Verizon stands to grow over the long haul as part of an extremely essential industry. Plus, its dividend yield might be worth the price of admission at the moment, with interest rates sitting at historic lows.

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