VERIZON COMMUNICATIONS INC (VZ) Stock Fundamental Analysis
NYSE:VZ - New York Stock Exchange, Inc. - US92343V1044 - Common Stock - Currency: USD
Overall VZ gets a fundamental rating of 5 out of 10. We evaluated VZ against 33 industry peers in the Diversified Telecommunication Services industry. VZ scores excellent on profitability, but there are concerns on its financial health. VZ has a correct valuation and a medium growth rate. 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.
In the past 5 years VZ has always been profitable.
In the past 5 years VZ always reported a positive cash flow from operatings.
1.2 Ratios
VZ's Return On Assets of 4.68% is fine compared to the rest of the industry. VZ outperforms 72.73% of its industry peers.
VZ has a Return On Equity of 17.66%. This is amongst the best in the industry. VZ outperforms 87.88% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.49%, VZ belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for VZ is in line with the industry average of 7.60%.
The last Return On Invested Capital (7.49%) for VZ is above the 3 year average (7.15%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.68% | ||
| ROE | 17.66% | ||
| ROIC | 7.49% |
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 Profit Margin of 13.14%. This is in the better half of the industry: VZ outperforms 78.79% of its industry peers.
In the last couple of years the Profit Margin of VZ has declined.
The Operating Margin of VZ (23.68%) is better than 87.88% of its industry peers.
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 60.02%, VZ is in the better half of the industry, outperforming 63.64% 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 | 23.68% | ||
| PM (TTM) | 13.14% | ||
| GM | 60.02% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so VZ is still creating some value.
Compared to 1 year ago, VZ has about the same amount of shares outstanding.
VZ has more shares outstanding than it did 5 years ago.
The debt/assets ratio for VZ has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.29, we must say that VZ is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.29, VZ is in the better half of the industry, outperforming 78.79% of the companies in the same industry.
VZ has a debt to FCF ratio of 7.12. This is a slightly negative value and a sign of low solvency as VZ would need 7.12 years to pay back of all of its debts.
VZ has a better Debt to FCF ratio (7.12) than 63.64% 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's Debt to Equity ratio of 1.20 is in line compared to the rest of the industry. VZ outperforms 48.48% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.2 | ||
| Debt/FCF | 7.12 | ||
| Altman-Z | 1.29 |
ROIC/WACC1.19
WACC6.31%
2.3 Liquidity
A Current Ratio of 0.61 indicates that VZ may have some problems paying its short term obligations.
VZ has a Current ratio of 0.61. This is amonst the worse of the industry: VZ underperforms 87.88% of its industry peers.
A Quick Ratio of 0.58 indicates that VZ may have some problems paying its short term obligations.
VZ has a worse Quick ratio (0.58) than 87.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.61 | ||
| Quick Ratio | 0.58 |
3. Growth
3.1 Past
VZ shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -0.64%.
The Earnings Per Share has been decreasing by -0.93% on average over the past years.
VZ shows a small growth in Revenue. In the last year, the Revenue has grown by 0.93%.
The Revenue has been growing slightly by 0.44% on average over the past years.
EPS 1Y (TTM)-0.64%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%3.48%
Revenue 1Y (TTM)0.93%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%1.53%
3.2 Future
Based on estimates for the next years, VZ will show a small growth in Earnings Per Share. The EPS will grow by 4.26% on average per year.
The Revenue is expected to grow by 1.81% on average over the next years.
EPS Next Y5.15%
EPS Next 2Y4.22%
EPS Next 3Y4.24%
EPS Next 5Y4.26%
Revenue Next Year1.97%
Revenue Next 2Y1.88%
Revenue Next 3Y1.73%
Revenue Next 5Y1.81%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 9.45, the valuation of VZ can be described as very reasonable.
Based on the Price/Earnings ratio, VZ is valued cheaper than 93.94% of the companies in the same industry.
VZ is valuated cheaply when we compare the Price/Earnings ratio to 26.03, which is the current average of the S&P500 Index.
VZ is valuated reasonably with a Price/Forward Earnings ratio of 8.78.
VZ's Price/Forward Earnings ratio is rather cheap when compared to the industry. VZ is cheaper than 90.91% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.94, VZ is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 8.78 |
4.2 Price Multiples
VZ's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. VZ is cheaper than 72.73% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as VZ.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.14 | ||
| EV/EBITDA | 6.51 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
VZ has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.84
PEG (5Y)N/A
EPS Next 2Y4.22%
EPS Next 3Y4.24%
5. Dividend
5.1 Amount
VZ has a Yearly Dividend Yield of 6.23%, which is a nice return.
Compared to an average industry Dividend Yield of 4.75, VZ pays a better dividend. On top of this VZ pays more dividend than 84.85% 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 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.23% |
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 63.59% of its income as dividend. This is not a sustainable payout ratio.
The dividend of VZ is growing, but earnings are growing more, so the dividend growth is sustainable.
DP63.59%
EPS Next 2Y4.22%
EPS Next 3Y4.24%
43.75
-0.47 (-1.06%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupTelecommunication Services
GICS IndustryDiversified Telecommunication Services
Earnings (Last)
Earnings (Next)
Inst Owners65.92%
Inst Owner Change2.14%
Ins Owners0.03%
Ins Owner Change7.15%
Market Cap184.45B
Analysts73.71
Price Target48.66 (11.22%)
Short Float %2.08%
Short Ratio3.41
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.23% |
Yearly Dividend2.67
Dividend Growth(5Y)1.99%
DP63.59%
Div Incr Years20
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.9%
Min EPS beat(2)-2.47%
Max EPS beat(2)0.67%
EPS beat(4)1
Avg EPS beat(4)-1.56%
Min EPS beat(4)-2.67%
Max EPS beat(4)0.67%
EPS beat(8)3
Avg EPS beat(8)-0.94%
EPS beat(12)3
Avg EPS beat(12)-1.41%
EPS beat(16)5
Avg EPS beat(16)-1.1%
Revenue beat(2)0
Avg Revenue beat(2)-2.06%
Min Revenue beat(2)-2.2%
Max Revenue beat(2)-1.92%
Revenue beat(4)0
Avg Revenue beat(4)-2.75%
Min Revenue beat(4)-3.7%
Max Revenue beat(4)-1.92%
Revenue beat(8)0
Avg Revenue beat(8)-2.96%
Revenue beat(12)0
Avg Revenue beat(12)-2.94%
Revenue beat(16)1
Avg Revenue beat(16)-2.78%
PT rev (1m)1.57%
PT rev (3m)3.08%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)0.23%
EPS NY rev (1m)0.23%
EPS NY rev (3m)0.13%
Revenue NQ rev (1m)0.25%
Revenue NQ rev (3m)0.14%
Revenue NY rev (1m)0.39%
Revenue NY rev (3m)0.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 8.78 | ||
| P/S | 1.36 | ||
| P/FCF | 9.14 | ||
| P/OCF | 4.9 | ||
| P/B | 1.83 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.51 |
EPS(TTM)4.63
EY10.58%
EPS(NY)4.99
Fwd EY11.39%
FCF(TTM)4.79
FCFY10.94%
OCF(TTM)8.92
OCFY20.39%
SpS32.09
BVpS23.89
TBVpS-21.27
PEG (NY)1.84
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.68% | ||
| ROE | 17.66% | ||
| ROCE | 10.03% | ||
| ROIC | 7.49% | ||
| ROICexc | 7.54% | ||
| ROICexgc | 18.89% | ||
| OM | 23.68% | ||
| PM (TTM) | 13.14% | ||
| GM | 60.02% | ||
| FCFM | 14.91% |
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 | 7.12 | ||
| Debt/EBITDA | 2.42 | ||
| Cap/Depr | 96.72% | ||
| Cap/Sales | 12.88% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 75.13% | ||
| Profit Quality | 113.47% | ||
| Current Ratio | 0.61 | ||
| Quick Ratio | 0.58 | ||
| Altman-Z | 1.29 |
F-Score7
WACC6.31%
ROIC/WACC1.19
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)-0.64%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%3.48%
EPS Next Y5.15%
EPS Next 2Y4.22%
EPS Next 3Y4.24%
EPS Next 5Y4.26%
Revenue 1Y (TTM)0.93%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%1.53%
Revenue Next Year1.97%
Revenue Next 2Y1.88%
Revenue Next 3Y1.73%
Revenue Next 5Y1.81%
EBIT growth 1Y5.56%
EBIT growth 3Y-0.48%
EBIT growth 5Y0.78%
EBIT Next Year70.37%
EBIT Next 3Y21.62%
EBIT Next 5Y13.35%
FCF growth 1Y55.55%
FCF growth 3YN/A
FCF growth 5Y2.28%
OCF growth 1Y-2.59%
OCF growth 3Y-2.27%
OCF growth 5Y0.64%