VERIZON COMMUNICATIONS INC (VZ) Stock Fundamental Analysis
USA - NYSE:VZ - US92343V1044 - Common Stock
40.55 USD
+0.8 (+2.01%)
40.6 USD
+0.05 (+0.12%)
VZ gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 36 industry peers in the Diversified Telecommunication Services industry. VZ has an excellent profitability rating, but there are concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on VZ. VZ also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
VZ had positive earnings in the past year.
VZ had a positive operating cash flow in the past year.
VZ had positive earnings in each of the past 5 years.
Each year in the past 5 years VZ had a positive operating cash flow.
1.2 Ratios
VZ's Return On Assets of 4.75% is amongst the best of the industry. VZ outperforms 86.11% of its industry peers.
VZ has a better Return On Equity (17.65%) than 94.44% of its industry peers.
VZ has a Return On Invested Capital of 7.50%. This is amongst the best in the industry. VZ outperforms 80.56% of its industry peers.
VZ had an Average Return On Invested Capital over the past 3 years of 7.15%. This is in line with the industry average of 5.86%.
The 3 year average ROIC (7.15%) for VZ is below the current ROIC(7.50%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.75% | ||
| ROE | 17.65% | ||
| ROIC | 7.5% |
ROA(3y)4.4%
ROA(5y)4.97%
ROE(3y)17.84%
ROE(5y)21.35%
ROIC(3y)7.15%
ROIC(5y)7.43%
1.3 Margins
VZ has a better Profit Margin (13.28%) than 88.89% of its industry peers.
VZ's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 23.62%, VZ belongs to the best of the industry, outperforming 86.11% of the companies in the same industry.
In the last couple of years the Operating Margin of VZ has remained more or less at the same level.
Looking at the Gross Margin, with a value of 59.48%, VZ is in line with its industry, outperforming 52.78% of the companies in the same industry.
VZ's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 23.62% | ||
| PM (TTM) | 13.28% | ||
| GM | 59.48% |
OM growth 3Y-0.77%
OM growth 5Y0.34%
PM growth 3Y-7.69%
PM growth 5Y-2.33%
GM growth 3Y1.22%
GM growth 5Y0.51%
2. Health
2.1 Basic Checks
VZ has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
VZ has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, VZ has more shares outstanding
Compared to 1 year ago, VZ has an improved debt to assets ratio.
2.2 Solvency
VZ has an Altman-Z score of 1.27. This is a bad value and indicates that VZ is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.27, VZ is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
The Debt to FCF ratio of VZ is 7.45, which is on the high side as it means it would take VZ, 7.45 years of fcf income to pay off all of its debts.
VZ's Debt to FCF ratio of 7.45 is fine compared to the rest of the industry. VZ outperforms 72.22% of its industry peers.
VZ has a Debt/Equity ratio of 1.20. This is a high value indicating a heavy dependency on external financing.
VZ has a Debt to Equity ratio (1.20) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.2 | ||
| Debt/FCF | 7.45 | ||
| Altman-Z | 1.27 |
ROIC/WACC1.26
WACC5.96%
2.3 Liquidity
A Current Ratio of 0.64 indicates that VZ may have some problems paying its short term obligations.
VZ has a worse Current ratio (0.64) than 86.11% of its industry peers.
A Quick Ratio of 0.60 indicates that VZ may have some problems paying its short term obligations.
VZ has a Quick ratio of 0.60. This is amonst the worse of the industry: VZ underperforms 86.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.64 | ||
| Quick Ratio | 0.6 |
3. Growth
3.1 Past
VZ shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.17%.
The Earnings Per Share has been decreasing by -0.93% on average over the past years.
The Revenue has been growing slightly by 2.05% in the past year.
Measured over the past years, VZ shows a small growth in Revenue. The Revenue has been growing by 0.44% on average per year.
EPS 1Y (TTM)2.17%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%6.09%
Revenue 1Y (TTM)2.05%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%5.21%
3.2 Future
VZ is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.79% yearly.
Based on estimates for the next years, VZ will show a small growth in Revenue. The Revenue will grow by 1.95% on average per year.
EPS Next Y5.46%
EPS Next 2Y4.5%
EPS Next 3Y4.29%
EPS Next 5Y4.79%
Revenue Next Year2.84%
Revenue Next 2Y2.45%
Revenue Next 3Y2.05%
Revenue Next 5Y1.95%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 8.63, the valuation of VZ can be described as reasonable.
Based on the Price/Earnings ratio, VZ is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.50, VZ is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 8.09, the valuation of VZ can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of VZ indicates a rather cheap valuation: VZ is cheaper than 97.22% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.99. VZ is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.63 | ||
| Fwd PE | 8.09 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, VZ is valued a bit cheaper than 77.78% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of VZ indicates a somewhat cheap valuation: VZ is cheaper than 61.11% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.72 | ||
| EV/EBITDA | 6.2 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of VZ may justify a higher PE ratio.
PEG (NY)1.58
PEG (5Y)N/A
EPS Next 2Y4.5%
EPS Next 3Y4.29%
5. Dividend
5.1 Amount
VZ has a Yearly Dividend Yield of 6.76%, which is a nice return.
Compared to an average industry Dividend Yield of 5.11, VZ pays a better dividend. On top of this VZ pays more dividend than 86.11% of the companies listed in the same industry.
VZ's Dividend Yield is rather good when compared to the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.76% |
5.2 History
The dividend of VZ has a limited annual growth rate of 1.99%.
VZ has paid a dividend for at least 10 years, which is a reliable track record.
VZ has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)1.99%
Div Incr Years20
Div Non Decr Years24
5.3 Sustainability
VZ pays out 62.46% of its income as dividend. This is not a sustainable payout ratio.
VZ's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP62.46%
EPS Next 2Y4.5%
EPS Next 3Y4.29%
40.55
+0.8 (+2.01%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupTelecommunication Services
GICS IndustryDiversified Telecommunication Services
Earnings (Last)
Earnings (Next)
Inst Owners67.92%
Inst Owner Change0%
Ins Owners0.02%
Ins Owner Change-2.09%
Market Cap170.97B
Analysts72.94
Price Target49.28 (21.53%)
Short Float %2.21%
Short Ratio5.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.76% |
Yearly Dividend2.67
Dividend Growth(5Y)1.99%
DP62.46%
Div Incr Years20
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.34%
Min EPS beat(2)0.01%
Max EPS beat(2)0.67%
EPS beat(4)2
Avg EPS beat(4)-0.89%
Min EPS beat(4)-2.47%
Max EPS beat(4)0.67%
EPS beat(8)3
Avg EPS beat(8)-1.05%
EPS beat(12)4
Avg EPS beat(12)-1.09%
EPS beat(16)5
Avg EPS beat(16)-1.25%
Revenue beat(2)0
Avg Revenue beat(2)-1.46%
Min Revenue beat(2)-2.2%
Max Revenue beat(2)-0.71%
Revenue beat(4)0
Avg Revenue beat(4)-2.01%
Min Revenue beat(4)-3.21%
Max Revenue beat(4)-0.71%
Revenue beat(8)0
Avg Revenue beat(8)-2.45%
Revenue beat(12)0
Avg Revenue beat(12)-2.77%
Revenue beat(16)0
Avg Revenue beat(16)-2.84%
PT rev (1m)-0.27%
PT rev (3m)1.28%
EPS NQ rev (1m)-0.15%
EPS NQ rev (3m)-0.25%
EPS NY rev (1m)0.1%
EPS NY rev (3m)0.35%
Revenue NQ rev (1m)0.07%
Revenue NQ rev (3m)0.7%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.85%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 8.63 | ||
| Fwd PE | 8.09 | ||
| P/S | 1.25 | ||
| P/FCF | 8.72 | ||
| P/OCF | 4.61 | ||
| P/B | 1.66 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.2 |
EPS(TTM)4.7
EY11.59%
EPS(NY)5.01
Fwd EY12.36%
FCF(TTM)4.65
FCFY11.47%
OCF(TTM)8.8
OCFY21.7%
SpS32.49
BVpS24.44
TBVpS-20.69
PEG (NY)1.58
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.75% | ||
| ROE | 17.65% | ||
| ROCE | 10.04% | ||
| ROIC | 7.5% | ||
| ROICexc | 7.58% | ||
| ROICexgc | 18.79% | ||
| OM | 23.62% | ||
| PM (TTM) | 13.28% | ||
| GM | 59.48% | ||
| FCFM | 14.31% |
ROA(3y)4.4%
ROA(5y)4.97%
ROE(3y)17.84%
ROE(5y)21.35%
ROIC(3y)7.15%
ROIC(5y)7.43%
ROICexc(3y)7.22%
ROICexc(5y)7.63%
ROICexgc(3y)17.6%
ROICexgc(5y)17.93%
ROCE(3y)9.58%
ROCE(5y)9.96%
ROICexcg growth 3Y0.43%
ROICexcg growth 5Y-0.86%
ROICexc growth 3Y-0.4%
ROICexc growth 5Y-4.26%
OM growth 3Y-0.77%
OM growth 5Y0.34%
PM growth 3Y-7.69%
PM growth 5Y-2.33%
GM growth 3Y1.22%
GM growth 5Y0.51%
F-Score7
Asset Turnover0.36
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.2 | ||
| Debt/FCF | 7.45 | ||
| Debt/EBITDA | 2.45 | ||
| Cap/Depr | 96.24% | ||
| Cap/Sales | 12.77% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 73.41% | ||
| Profit Quality | 107.77% | ||
| Current Ratio | 0.64 | ||
| Quick Ratio | 0.6 | ||
| Altman-Z | 1.27 |
F-Score7
WACC5.96%
ROIC/WACC1.26
Cap/Depr(3y)132.1%
Cap/Depr(5y)187.34%
Cap/Sales(3y)17.07%
Cap/Sales(5y)23.57%
Profit Quality(3y)89.4%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)2.17%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%6.09%
EPS Next Y5.46%
EPS Next 2Y4.5%
EPS Next 3Y4.29%
EPS Next 5Y4.79%
Revenue 1Y (TTM)2.05%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%5.21%
Revenue Next Year2.84%
Revenue Next 2Y2.45%
Revenue Next 3Y2.05%
Revenue Next 5Y1.95%
EBIT growth 1Y5.16%
EBIT growth 3Y-0.48%
EBIT growth 5Y0.78%
EBIT Next Year71.37%
EBIT Next 3Y21.64%
EBIT Next 5Y13.82%
FCF growth 1Y58.54%
FCF growth 3YN/A
FCF growth 5Y2.28%
OCF growth 1Y-1.06%
OCF growth 3Y-2.27%
OCF growth 5Y0.64%