Briefing From The Editor -- VZ Stock

Verizon Communications logged a 0.8% change during today's afternoon session, and is now trading at a price of $37.76 per share.

Over the last year, Verizon Communications logged a -2.0% change, with its stock price reaching a high of $42.58 and a low of $30.14. Over the same period, the stock underperformed the S&P 500 index by -14.0%. As of April 2023, the company's 50-day average price was $33.9. 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 110,500 full time employees. Verizon Communications has offered a 7.0% dividend yield over the last 12 months.

Overview of the Company's Finances:

2018 2019 2020 2021 2022 2023
Revenue (MM) $130,863 $131,868 $128,292 $133,613 $136,835 $134,095
Gross Margins 17% 23% 22% 24% 22% 22%
Operating Margins 17% 23% 22% 24% 22% 22%
Net Margins 12% 15% 14% 17% 16% 16%
Net Income (MM) $16,039 $19,788 $18,348 $22,618 $21,748 $21,366
Net Interest Expense (MM) $4,833 $4,730 $4,247 $3,485 $3,613 $5,030
Depreciation & Amort. (MM) $17,403 $16,682 $16,720 $16,206 $17,099 $17,326
Earnings Per Share $3.76 $4.65 $4.3 $5.32 $5.06 $4.96
Diluted Shares (MM) 4,132 4,140 4,142 4,150 4,204 4,236
Free Cash Flow (MM) $17,681 $17,807 $23,576 $19,253 $14,054 $16,300
Capital Expenditures (MM) $16,658 $17,939 $18,192 $20,286 $23,087 $21,440
Net Current Assets (MM) -$175,483 -$191,419 -$192,615 -$246,668 -$249,360 -$247,623
Long Term Debt (MM) $105,873 $100,712 $123,173 $143,425 $140,676 $134,441
Net Debt / EBITDA 2.78 2.31 2.46 3.05 3.12 3.07

Verizon Communications has average net margins with a stable trend, irregular cash flows, and significant leverage. We also note that the company benefits from weak revenue growth and increasing reinvestment in the business and positive EPS growth. However, the firm has slimmer gross margins than its peers.

The Market May Be Undervaluing Verizon Communications's Earnings and Assets:

Verizon Communications has a trailing twelve month P/E ratio of 6.8, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of $4.23, the company has a forward P/E ratio of 8.0. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 4.7%. On this basis, the company's PEG ratio is 1.44, which shows that it is fairly priced. Additionally, the market is possibly undervaluing Verizon Communications in terms of its equity because its P/B ratio is 1.62 whereas the sector average is 3.12.

Verizon Communications Has an Average Rating of Hold:

The 22 analysts following Verizon Communications have set target prices ranging from $28.29 to $43.8 per share, for an average of $35.83 with a hold rating. As of April 2023, the company is trading -5.4% away from its average target price, indicating that there is an analyst consensus of little upside potential.

Verizon Communications has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 63.9% 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 Vanguard Group Inc, whose 8% stake in the company is worth $13,275,954,626.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.