In the lead up to Verizon Communications' (NYSE:VZ) announcement of its third quarter earnings on Thursday, October 18, 2012 analysts' expectations have fallen over the past month to earnings of 65 cents per share from earnings of 67 cents per share.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: How To Decode A Company's Earnings Reports

What to Expect: Verizon is expected to report 65 cents per share, up 16.1% from a year ago when the company reported earnings of 56 cents per share.

The consensus estimate is down from three months ago when it was 66 cents. For the fiscal year, analysts are expecting earnings of $2.48 per share.

Revenue is expected to exceed last year's figure of $27.91 billion by 3.8% and come in at $28.98 billion for the quarter. For the fiscal year, expected revenue is $115.36 billion.

Company Performance: Verizon has reported revenue increases for the past four quarters. It increased 3.7% to $28.55 billion in the second quarter. Prior to that, the figure rose 4.6% in the first quarter, 7.7% in the fourth quarter of the last fiscal year and 5.4% in the third quarter of the last fiscal year.

VZ's P/E ratio of 44.2 is above the industry average of 8.54. This could mean that the market is expecting big things over the next few months or years. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: The P/E Ratio: A Good Market-Timing Indicator

The stock price has fallen 2.3% since July 17, 2012, from $45.66 to $44.62. Verizon's stock price is on a downward streak. The share price has fallen $2.64 since October 4, 2012.

The Competition: Verizon Communications provides communications services. Analysts generally consider Verizon a hold, with 18 of 31 analysts rating it as such. In the last three months, the number of buy ratings has increased slightly.

The company's closest competitor in the communications services industry is AT&T (T). Analysts are more optimistic about Verizon than about AT&T. Only nine out of 30 analysts rate the latter a buy compared to 12 of 31 for the former.