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Verizon Communications Inc VZ

Morningstar Rating
$38.25 −0.40 (1.03%)
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Company Report

Verizon Likely Won't Grow Revenue Rapidly but Cash Flow Should Remain Strong

Verizon Communications is primarily focused on the wireless business, where it has taken steps to ensure it remains well positioned, building fiber deeper into major metro areas, acquiring a huge chunk of spectrum, and ramping up spending to put that spectrum to use. We believe Verizon will deliver consistent results, but growth will likely be very modest. Rivals AT&T and T-Mobile offer comparable services and sell at similar prices, which we expect will diminish Verizon’s market share lead over time. We don’t expect liabilities associated with lead-sheathed cabling will overly tax Verizon’s ability to generate steady cash flow, but this matter creates additional uncertainty that is difficult to quantify.

Price vs Fair Value

VZ is trading at a 29% discount.
Price
$38.25
Fair Value
$43.00
Uncertainty
Medium
1-Star Price
$15.40
5-Star Price
$27.40
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

A focus on network strength over the past 15 years has put Verizon in an enviable position. Its wireless network provides the broadest coverage in the industry, and its reputation with customers is sterling.

Bears

Wireless technology is dramatically lowering the cost to build and maintain a network. Rival carriers, especially T-Mobile, are rapidly deploying new spectrum and technology to add coverage and capacity. Verizon’s network leadership is a thing of the past.

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News

Trading Information

Previous Close Price
$38.65
Day Range
$38.0138.68
52-Week Range
$30.1444.73
Bid/Ask
$38.25 / $38.29
Market Cap
$160.81 Bil
Volume/Avg
21.9 Mil / 22.4 Mil

Key Statistics

Price/Earnings (Normalized)
7.94
Price/Sales
1.20
Dividend Yield
6.86%
Dividend Yield (Forward)
6.95%
Total Yield
6.86%

Company Profile

Verizon Communications is primarily a wireless business (it provides about 70% of service revenue and nearly all operating income). It serves about 92 million postpaid and 22 million prepaid phone customers (following the acquisition of Tracfone) via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks in the Northeast, which reach about 25 million homes and businesses and serve about 8 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, often using a mixture of its own and other carriers' networks.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
117,100

Competitors

Valuation

Metric
VZ
CMCSA
TMUS
Price/Earnings (Normalized)
7.9410.6620.12
Price/Book Value
1.662.072.81
Price/Sales
1.201.472.42
Price/Cash Flow
4.385.847.60
Price/Earnings
VZ
CMCSA
TMUS

Financial Strength

Metric
VZ
CMCSA
TMUS
Quick Ratio
0.500.560.64
Current Ratio
0.680.700.86
Interest Coverage
6.425.974.11
Quick Ratio
VZ
CMCSA
TMUS

Profitability

Metric
VZ
CMCSA
TMUS
Return on Assets (Normalized)
5.57%6.41%4.32%
Return on Equity (Normalized)
22.92%20.23%13.52%
Return on Invested Capital (Normalized)
9.18%10.66%6.54%
Return on Assets
VZ
CMCSA
TMUS

Telecom Services Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
TMUS
T-Mobile US IncBsqcvpl$180.9 Bil
CMCSA
Comcast Corp Class AQkg$169.5 Bil
DTEGY
Deutsche Telekom AG ADRWhcymw$121.3 Bil
T
AT&T IncNdvzgf$121.0 Bil
KDDIY
KDDI Corp ADRXhwvzb$65.6 Bil
AMX
America Movil SAB de CV ADR - Series BHxmpc$56.8 Bil
CHTR
Charter Communications Inc Class ALjbnsd$54.4 Bil
BCE
BCE IncLbzcb$37.0 Bil
ORAN
Orange SA ADRSwc$31.8 Bil