VERIZON COMMUNICATIONS INC (VZ) Stock Fundamental Analysis
NYSE:VZ - New York Stock Exchange, Inc. - US92343V1044 - Common Stock - Currency: USD
Taking everything into account, VZ scores 5 out of 10 in our fundamental rating. VZ was compared to 33 industry peers in the Diversified Telecommunication Services industry. VZ has an excellent profitability rating, but there are concerns on its financial health. VZ has a decent growth rate and is not valued too expensively. Finally 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.
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.
With an excellent Return On Equity value of 17.66%, VZ belongs to the best of the industry, outperforming 87.88% of the companies in the same industry.
VZ has a Return On Invested Capital of 7.49%. This is amongst the best in the industry. VZ outperforms 81.82% of its industry peers.
The Average Return On Invested Capital over the past 3 years for VZ is in line with the industry average of 7.13%.
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's Profit Margin of 13.14% is fine compared to the rest of the industry. VZ outperforms 78.79% of its industry peers.
In the last couple of years the Profit Margin of VZ has declined.
Looking at the Operating Margin, with a value of 23.68%, VZ belongs to the top of the industry, outperforming 87.88% 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.
VZ has a better Gross Margin (60.02%) than 60.61% of its industry peers.
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
VZ has an Altman-Z score of 1.29. This is a bad value and indicates that VZ is not financially healthy and even has some risk of bankruptcy.
VZ has a Altman-Z score of 1.29. This is in the better half of the industry: VZ outperforms 75.76% of its industry peers.
The Debt to FCF ratio of VZ is 7.12, which is on the high side as it means it would take VZ, 7.12 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 7.12, VZ is doing good in the industry, outperforming 66.67% of the companies in the same industry.
A Debt/Equity ratio of 1.20 is on the high side and indicates that VZ has dependencies on debt 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/WACC1.18
WACC6.33%
2.3 Liquidity
A Current Ratio of 0.61 indicates that VZ may have some problems paying its short term obligations.
The Current ratio of VZ (0.61) is worse than 90.91% of its industry peers.
VZ has a Quick Ratio of 0.61. This is a bad value and indicates that VZ is not financially healthy enough and could expect problems in meeting its short term obligations.
VZ's Quick ratio of 0.58 is on the low side compared to the rest of the industry. VZ is outperformed by 90.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.61 | ||
| Quick Ratio | 0.58 |
3. Growth
3.1 Past
The earnings per share for VZ have decreased by -0.64% in the last year.
VZ shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -0.93% yearly.
The Revenue has been growing slightly by 0.93% 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)-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
The Earnings Per Share is expected to grow by 4.94% on average over the next years.
The Revenue is expected to grow by 1.83% on average over the next years.
EPS Next Y5.15%
EPS Next 2Y4.22%
EPS Next 3Y4.24%
EPS Next 5Y4.94%
Revenue Next Year1.97%
Revenue Next 2Y1.85%
Revenue Next 3Y1.69%
Revenue Next 5Y1.83%
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
VZ is valuated reasonably with a Price/Earnings ratio of 9.45.
Based on the Price/Earnings ratio, VZ is valued cheaper than 93.94% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.59, VZ is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 8.77, the valuation of VZ can be described as reasonable.
Based on the Price/Forward Earnings ratio, VZ is valued cheaper than 90.91% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.39, VZ is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 8.77 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, VZ is valued a bit cheaper than 72.73% of the companies in the same industry.
VZ's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 9.14 | ||
| EV/EBITDA | 6.54 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of VZ 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
With a Yearly Dividend Yield of 6.26%, VZ is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 5.07, VZ pays a better dividend. On top of this VZ pays more dividend than 87.88% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, VZ pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.26% |
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 their dividend for at least 10 years, which is a reliable track record.
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.
VZ's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP63.59%
EPS Next 2Y4.22%
EPS Next 3Y4.24%
43.74
-0.39 (-0.88%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupTelecommunication Services
GICS IndustryDiversified Telecommunication Services
Earnings (Last)
Earnings (Next)
Inst Owners65.92%
Inst Owner Change2.49%
Ins Owners0.03%
Ins Owner Change7.15%
Market Cap184.41B
Analysts73.71
Price Target48.66 (11.25%)
Short Float %2.12%
Short Ratio4.08
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.26% |
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)0.55%
PT rev (3m)1.66%
EPS NQ rev (1m)-0.06%
EPS NQ rev (3m)0.17%
EPS NY rev (1m)0.23%
EPS NY rev (3m)0.12%
Revenue NQ rev (1m)0.06%
Revenue NQ rev (3m)0.2%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.11%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.45 | ||
| Fwd PE | 8.77 | ||
| P/S | 1.36 | ||
| P/FCF | 9.14 | ||
| P/OCF | 4.9 | ||
| P/B | 1.83 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.54 |
EPS(TTM)4.63
EY10.59%
EPS(NY)4.99
Fwd EY11.4%
FCF(TTM)4.79
FCFY10.94%
OCF(TTM)8.92
OCFY20.4%
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
WACC6.33%
ROIC/WACC1.18
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 5Y4.94%
Revenue 1Y (TTM)0.93%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%1.53%
Revenue Next Year1.97%
Revenue Next 2Y1.85%
Revenue Next 3Y1.69%
Revenue Next 5Y1.83%
EBIT growth 1Y5.56%
EBIT growth 3Y-0.48%
EBIT growth 5Y0.78%
EBIT Next Year70.91%
EBIT Next 3Y21.43%
EBIT Next 5Y13.57%
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%