VERIZON COMMUNICATIONS INC (VZ) Stock Fundamental Analysis
NYSE:VZ - New York Stock Exchange, Inc. - US92343V1044 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to VZ. VZ was compared to 32 industry peers in the Diversified Telecommunication Services industry. VZ has an excellent profitability rating, but there are concerns on its financial health. VZ is not valued too expensively and it also shows a decent growth rate. Finally VZ also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year VZ was profitable.
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 has a better Return On Assets (4.55%) than 84.38% of its industry peers.
VZ has a better Return On Equity (17.64%) than 87.50% of its industry peers.
VZ has a better Return On Invested Capital (7.40%) than 84.38% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for VZ is in line with the industry average of 5.49%.
The last Return On Invested Capital (7.40%) for VZ is above the 3 year average (7.15%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.55% | ||
| ROE | 17.64% | ||
| ROIC | 7.4% |
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
The Profit Margin of VZ (12.99%) is better than 84.38% of its industry peers.
In the last couple of years the Profit Margin of VZ has declined.
The Operating Margin of VZ (23.53%) is better than 87.50% of its industry peers.
VZ's Operating Margin has been stable in the last couple of years.
The Gross Margin of VZ (60.01%) is better than 62.50% of its industry peers.
VZ's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 23.53% | ||
| PM (TTM) | 12.99% | ||
| GM | 60.01% |
OM growth 3Y-0.77%
OM growth 5Y0%
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.
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 1.26. This is a bad value and indicates that VZ is not financially healthy and even has some risk of bankruptcy.
With a decent Altman-Z score value of 1.26, VZ is doing good in the industry, outperforming 78.13% of the companies in the same industry.
VZ has a debt to FCF ratio of 7.61. This is a slightly negative value and a sign of low solvency as VZ would need 7.61 years to pay back of all of its debts.
VZ has a better Debt to FCF ratio (7.61) than 68.75% of its industry peers.
A Debt/Equity ratio of 1.22 is on the high side and indicates that VZ has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.22, VZ is in line with its industry, outperforming 46.88% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.22 | ||
| Debt/FCF | 7.61 | ||
| Altman-Z | 1.26 |
ROIC/WACC1.19
WACC6.24%
2.3 Liquidity
VZ has a Current Ratio of 0.63. 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 has a Current ratio of 0.63. This is amonst the worse of the industry: VZ underperforms 84.38% of its industry peers.
VZ has a Quick Ratio of 0.63. 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 has a Quick ratio of 0.59. This is amonst the worse of the industry: VZ underperforms 84.38% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.59 |
3. Growth
3.1 Past
VZ shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.55%.
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 0.61% 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)-2.55%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%1.85%
Revenue 1Y (TTM)0.61%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%1.57%
3.2 Future
VZ is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.26% yearly.
VZ is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.81% yearly.
EPS Next Y4.8%
EPS Next 2Y4.49%
EPS Next 3Y4.73%
EPS Next 5Y4.26%
Revenue Next Year1.57%
Revenue Next 2Y1.83%
Revenue Next 3Y1.88%
Revenue Next 5Y1.81%
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 9.59.
84.38% of the companies in the same industry are more expensive than VZ, based on the Price/Earnings ratio.
VZ is valuated cheaply when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 9.16, the valuation of VZ can be described as reasonable.
VZ's Price/Forward Earnings ratio is rather cheap when compared to the industry. VZ is cheaper than 93.75% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, VZ is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.59 | ||
| Fwd PE | 9.16 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, VZ is valued a bit cheaper than 71.88% 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 | 9.8 | ||
| EV/EBITDA | 6.56 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates VZ does not grow enough to justify the current Price/Earnings ratio.
VZ has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2
PEG (5Y)N/A
EPS Next 2Y4.49%
EPS Next 3Y4.73%
5. Dividend
5.1 Amount
VZ has a Yearly Dividend Yield of 6.31%, which is a nice return.
VZ's Dividend Yield is rather good when compared to the industry average which is at 5.32. VZ pays more dividend than 84.38% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.57, VZ pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.31% |
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
64.26% of the earnings are spent on dividend by VZ. This is not a sustainable payout ratio.
VZ's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP64.26%
EPS Next 2Y4.49%
EPS Next 3Y4.73%
44.04
+0.43 (+0.99%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupTelecommunication Services
GICS IndustryDiversified Telecommunication Services
Earnings (Last)
Earnings (Next)
Inst Owners65.92%
Inst Owner Change0.02%
Ins Owners0.03%
Ins Owner Change9%
Market Cap185.40B
Analysts72.57
Price Target47.91 (8.79%)
Short Float %1.55%
Short Ratio2.58
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.31% |
Yearly Dividend2.67
Dividend Growth(5Y)1.99%
DP64.26%
Div Incr Years20
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.13%
Min EPS beat(2)-2.47%
Max EPS beat(2)-1.78%
EPS beat(4)0
Avg EPS beat(4)-1.8%
Min EPS beat(4)-2.67%
Max EPS beat(4)-0.26%
EPS beat(8)2
Avg EPS beat(8)-1.36%
EPS beat(12)2
Avg EPS beat(12)-1.68%
EPS beat(16)4
Avg EPS beat(16)-1.23%
Revenue beat(2)0
Avg Revenue beat(2)-2.56%
Min Revenue beat(2)-3.21%
Max Revenue beat(2)-1.92%
Revenue beat(4)0
Avg Revenue beat(4)-3.12%
Min Revenue beat(4)-3.7%
Max Revenue beat(4)-1.92%
Revenue beat(8)0
Avg Revenue beat(8)-3.29%
Revenue beat(12)0
Avg Revenue beat(12)-3%
Revenue beat(16)1
Avg Revenue beat(16)-2.75%
PT rev (1m)0.05%
PT rev (3m)0.59%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)-1.48%
EPS NY rev (1m)-0.21%
EPS NY rev (3m)-1.32%
Revenue NQ rev (1m)-0.48%
Revenue NQ rev (3m)-1.07%
Revenue NY rev (1m)-0.28%
Revenue NY rev (3m)-0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.59 | ||
| Fwd PE | 9.16 | ||
| P/S | 1.38 | ||
| P/FCF | 9.8 | ||
| P/OCF | 5.02 | ||
| P/B | 1.87 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.56 |
EPS(TTM)4.59
EY10.42%
EPS(NY)4.81
Fwd EY10.92%
FCF(TTM)4.49
FCFY10.21%
OCF(TTM)8.77
OCFY19.91%
SpS32.02
BVpS23.57
TBVpS-21.7
PEG (NY)2
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.55% | ||
| ROE | 17.64% | ||
| ROCE | 9.91% | ||
| ROIC | 7.4% | ||
| ROICexc | 7.5% | ||
| ROICexgc | 18.92% | ||
| OM | 23.53% | ||
| PM (TTM) | 12.99% | ||
| GM | 60.01% | ||
| FCFM | 14.04% |
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-1.19%
ROICexc growth 3Y-0.4%
ROICexc growth 5Y-4.59%
OM growth 3Y-0.77%
OM growth 5Y0%
PM growth 3Y-7.69%
PM growth 5Y-2.33%
GM growth 3Y1.22%
GM growth 5Y0.51%
F-Score6
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.22 | ||
| Debt/FCF | 7.61 | ||
| Debt/EBITDA | 2.45 | ||
| Cap/Depr | 100.55% | ||
| Cap/Sales | 13.35% | ||
| Interest Coverage | 5.76 | ||
| Cash Conversion | 74.41% | ||
| Profit Quality | 108.09% | ||
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.59 | ||
| Altman-Z | 1.26 |
F-Score6
WACC6.24%
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)-2.55%
EPS 3Y-5.27%
EPS 5Y-0.93%
EPS Q2Q%1.85%
EPS Next Y4.8%
EPS Next 2Y4.49%
EPS Next 3Y4.73%
EPS Next 5Y4.26%
Revenue 1Y (TTM)0.61%
Revenue growth 3Y0.29%
Revenue growth 5Y0.44%
Sales Q2Q%1.57%
Revenue Next Year1.57%
Revenue Next 2Y1.83%
Revenue Next 3Y1.88%
Revenue Next 5Y1.81%
EBIT growth 1Y8.61%
EBIT growth 3Y-0.48%
EBIT growth 5Y0.44%
EBIT Next Year70.37%
EBIT Next 3Y21.62%
EBIT Next 5Y13.35%
FCF growth 1Y46.55%
FCF growth 3YN/A
FCF growth 5Y2.28%
OCF growth 1Y-1.5%
OCF growth 3Y-2.27%
OCF growth 5Y0.64%