Is Verizon Communications overvalued?
 | By Aina Ster | Macroaxis Story |
Verizon Communications currently has a performance score of 12 out of 100. With a beta of 0.2, the stock shows minimal volatility compared to the broader market. This means that when the market rises, Verizon's gains are likely to be smaller, but in a downturn, its losses should also be less severe. The stock carries a risk level of 1.12%. To make informed decisions about investing in Verizon, consider examining its value at risk, kurtosis, and market facilitation index. Additionally, analyze the relationship between its semi-variance and rate of daily change to determine if Verizon will continue its current price trends.
Main Points
Verizon Communications, with a market capitalization of 184B, is a major player in the telecom services industry, yet its recent price change of -0.29 suggests a potential disconnect between its market value and investor sentiment. As the company navigates through competitive pressures and evolving consumer demands, understanding whether its stock is undervalued or poised for growth requires a closer look at its financial health and strategic initiatives.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Gabriel Shpitalnik
Buy low, sell high is a mantra that resonates with investors, but when it comes to Verizon Communications, the question is whether the stock is truly undervalued or simply treading water. With a robust operating margin of 23.13% and a hefty net income of $21.4 billion, Verizon stands as a formidable player in the telecom industry. However, the stock's current valuation, with a market value of $43.7 billion, raises eyebrows, especially when juxtaposed with an analyst target price of $37.26. While the earnings per share estimate for next year is a promising $4.69, the stock's potential downside price of $43.46 suggests caution. Investors should weigh these factors carefully, considering both the growth potential and the risk of overvaluation. Currently, Verizon Communications' payout ratio remains relatively stable compared to last year. Looking ahead to 2024, the company's capital expenditure to operating cash flow ratio is expected to increase to 0.67, while the dividend yield might decrease by 0.05. Despite some baby boomers showing little interest in the diversified telecommunications sector, it's worth examining Verizon Communications more closely. We'll explore whether the company can reduce net losses this year. Additionally, I'll discuss key factors influencing Verizon's products and how these might affect the company's prospects for active traders in the coming months.The performance of Verizon Communications in the marketplace will significantly impact your decision to invest in its stock. Revenue growth, profitability, competitive positioning, management quality, and industry trends can influence Verizon Communications' stock prices. When investing in Verizon Communications, there are several factors to consider and potential outcomes to expect. As a company performs well, its stock price may increase, allowing investors to benefit from price appreciation. However, Verizon Stock can experience significant price fluctuations due to market conditions, economic factors, industry trends, or company-specific news. This is why investing in stocks such as Verizon Communications carries risks, including the potential for capital loss. Stock prices can decline, and investors may incur losses if they sell shares at a lower price than their initial investment.
And What about dividends?
A dividend is the distribution of a portion of Verizon Communications earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Verizon Communications dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Verizon one year expected dividend income is about USD2.2 per share.
Dividend Payout Ratio is likely to rise to 1.36 in 2024, whereas Dividends Paid is likely to drop slightly above 5.9 B in 2024. | Last Reported | Projected for Next Year | ||
| Dividends Paid | 11 B | 5.9 B | |
| Dividend Yield | 0.07 | 0.05 | |
| Dividend Payout Ratio | 0.95 | 1.36 | |
| Dividend Paid And Capex Coverage Ratio | 1.26 | 0.97 |
Investing in dividend-paying stocks, such as Verizon Communications is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Verizon Communications must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Verizon Communications. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.How important is Verizon Communications's Liquidity
Verizon Communications financial leverage refers to using borrowed capital as a funding source to finance Verizon Communications ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Verizon Communications financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Verizon Communications' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Verizon Communications' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Verizon Communications's total debt and its cash.
What do experts say about Verizon?
Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
Analysis ConsensusBreaking down Verizon Communications Indicators
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Verizon Communications has an asset utilization ratio of 35.23 percent. This suggests that the Company is making $0.35 for each dollar of assets. An increasing asset utilization means that Verizon Communications is more efficient with each dollar of assets it utilizes for everyday operations. Warren Buffett once said, "Price is what you pay. Value is what you get." This wisdom is particularly relevant when evaluating Verizon Communications, which currently trades at a price-to-earnings ratio of 8.48x, suggesting it may offer value compared to its peers in the telecom sector. With an estimated EPS of $4.57 for the current year, the stock appears to be trading at a reasonable valuation, given its solid operating income of $22.9 billion. However, the company's substantial total debt of $173.58 billion and a modest quarterly revenue growth of 0.6% raise questions about its growth trajectory. Investors should weigh these factors carefully to determine if Verizon is a value play or facing potential overvaluation.
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