Verizon Communications returned losses of -27.6% last year, with its stock price reaching a high of $52.18 and a low of $33.72. Over the same period, the stock underperformed the S&P 500 index by -44.0%. As of April 2023, the company's 50-day average price was $37.26. Verizon Communications Inc., through its subsidiaries, provides communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. Based in New York, NY, the large-cap Telecommunications company has 117,100 full time employees. Verizon Communications has offered a 7.3% dividend yield over the last 12 months.
Stable Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $131,868 | $128,292 | $133,613 | $136,835 |
| Gross Margins | 58.5% | 60.1% | 57.9% | 56.8% |
| Operating Margins | 23.2% | 22.4% | 24.3% | 22.3% |
| Net Margins | 14.61% | 13.88% | 16.51% | 15.53% |
| Net Income (MM) | $19,265 | $17,801 | $22,065 | $21,256 |
| Net Interest Expense (MM) | -4,730 | -4,247 | -3,485 | -3,613 |
| Net Interest Expense (MM) | -$4,730 | -$4,247 | -$3,485 | -$3,613 |
| Depreciation & Amort. (MM) | -$16,682 | -$16,720 | -$16,206 | -$17,099 |
| Earnings Per Share | $4.65 | $4.3 | $5.32 | $5.14 |
| EPS Growth | n/a | -7.53% | 23.72% | -3.38% |
| Diluted Shares (MM) | 4,140 | 4,142 | 4,150 | 4,204 |
| Free Cash Flow (MM) | $16,909 | $21,450 | -$28,343 | $10,401 |
| Capital Expenditures (MM) | -$18,837 | -$20,318 | -$67,882 | -$26,740 |
| Net Current Assets (MM) | -$191,419 | -$192,615 | -$246,668 | -$249,360 |
| Current Ratio | 0.84 | 1.38 | 0.78 | 0.75 |
| Long Term Debt (MM) | $100,712 | $123,173 | $143,425 | $140,676 |
| Net Debt / EBITDA | 2.57 | 2.49 | 3.13 | 3.14 |
Verizon Communications has stable revenues and increasing reinvestment in the business, strong margins with a stable trend, and positive EPS growth. However, the firm has slimmer gross margins than its peers. Finally, we note that Verizon Communications has irregular cash flows and significant leverage.
Verizon Communications Is Potentially Undervalued and Trades Below Its Graham Number:
Verizon Communications has a trailing twelve month P/E ratio of 7.2, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of $4.7, the company has a forward P/E ratio of 7.9. The 0.2% compound average growth rate of Verizon Communications's historical and projected earnings per share yields a PEG ratio of 33.85. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Verizon Communications in terms of its equity because its P/B ratio is 1.61 while the sector average is 3.12. The company's shares are currently trading -27.4% below their Graham number.
Verizon Communications Has an Average Rating of Hold:
The 23 analysts following Verizon Communications have set target prices ranging from $32.0 to $64.0 per share, for an average of $43.48 with a hold rating. As of April 2023, the company is trading -14.3% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Verizon Communications has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 64.2% of the company's shares, and the insider ownership rate stands at 0.03%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 8% stake in the company is worth $12,434,871,926.
