The second-quarter earnings season delivered a jolt to markets Monday as two industrial titans—Verizon (VZ) and Cleveland-Cliffs (CLF)—posted results that surpassed expectations.
Verizon surged more than 4% after delivering its best revenue growth in nearly four years, while Cleveland-Cliffs jumped 12% following a dramatic improvement in profitability and a bullish forecast. For investors, the results highlight the strength of these legacy companies in navigating a volatile economic and competitive environment.
Verizon Delivers Record EBITDA, Raises 2025 Outlook Amid AI and Wireless Momentum
Verizon reported adjusted earnings of $1.22 per share, topping analyst expectations, but the bigger story was its revenue. At $34.5 billion, sales climbed more than 5% year-over-year—the strongest growth Verizon has posted in nearly four years. The result was driven by gains in both service and equipment sales, with wireless equipment revenue alone soaring more than 25%.
Operational performance was equally solid. Adjusted EBITDA rose 4.1% to a record $12.8 billion, and free cash flow guidance for the year was raised to as high as $20.5 billion. Verizon credited tax reform, tighter cost controls, and new AI-powered initiatives for the improved outlook. The telecom giant also raised its 2025 EPS growth forecast to a range of 1% to 3%, from its earlier 0%-3% target.
Fixed wireless access continues to be a key growth driver, crossing 5 million subscribers and on pace to hit 8–9 million by 2028. Verizon also reported a long-awaited inflection point in prepaid average revenue per user, which rose above $32 and is now expected to positively contribute to wireless service revenue through the rest of the year.
While postpaid phone net losses totaled 51,000, it marked a meaningful improvement from prior quarters. Management attributed this to early results from new customer retention strategies launched in June, including more personalized AI-powered service.
Cleveland-Cliffs Cuts Costs, Powers Past Expectations as Tariff Tailwinds Build
Cleveland-Cliffs posted an adjusted loss of $0.50 per share, but that was far narrower than analysts had forecast. More importantly, the steelmaker’s adjusted EBITDA rebounded sharply to $97 million in the quarter—a swing of over $270 million from the prior quarter. Despite a modest 3% decline in revenue to $4.93 billion, the stock soared more than 12% as the company reaffirmed its bullish outlook.
Average selling prices for steel were down about 10% from last year, but improved 3.5% quarter-over-quarter, signaling a recovery aided by domestic pricing strength and trade protections. Tariffs on steel imports—recently raised to 50%—are helping shield Cliffs from foreign undercutting, while demand from the automotive sector remains robust.
Sales volumes jumped 7.5% year-over-year to a record 4.29 million net tons, driven by recovering manufacturing activity. Cost-cutting efforts also bore fruit: per-ton costs declined by $15 versus Q1, thanks to footprint optimization initiatives that included facility closures and asset divestitures. These moves are expected to yield over $300 million in annual savings.
Management projects continued momentum in Q3, with further cost reductions and stable shipments. By year-end, Cliffs expects to terminate an unprofitable slab contract—potentially adding $500 million in annualized EBITDA starting in 2026. Combined with tariff support and strong automotive volumes, the company sees a clear runway for margin expansion.
Markets Respond to Stronger Fundamentals, Operational Discipline in Both Giants
Investors rewarded both Verizon and Cleveland-Cliffs for not just beating estimates but doing so through strategic execution. Verizon’s ability to grow service revenue while expanding its fiber and AI initiatives suggests a transformation into a more future-facing telecom player. Meanwhile, Cliffs has managed to turn cost headwinds into tailwinds through surgical operational changes and is poised to benefit from a more protectionist trade environment.
The strong showing from these two industrial players underscores the power of fundamentals in an otherwise cautious market. For long-term investors, both companies offer differentiated value: Verizon with a resilient dividend yield near 6.4% and improving tech capabilities, and Cleveland-Cliffs with a leaner, more profitable steel platform ready to capture cyclical upside.
Conclusion
Verizon and Cleveland-Cliffs delivered textbook examples of how legacy businesses can outperform by focusing on operational excellence and strategic reinvention. As earnings season rolls on, their performances set a high bar—not just in beating the street, but in proving their relevance in a rapidly changing economic landscape.
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