Verizon Communications Inc. (NYSE:VZ) February 22, 2015

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VZ-US
Implied Price
OVERVALUED
35.78 53.66
BA
A Price as of Close Feb 20 48.97 USD
B CapitalCube Median Implied Price 37.09 USD * CapitalCube Price is over trading range * CapitalCube Price is below trading range
CapitalCube Estimate Range 35.78 - 38.41 USD NA
52 Week Range 45.09 - 53.66 USD
Fundamental Score
 0  100
BA
A Fundamental Score (VZ) 68
B Fundamental Score(Peer Median) 48.5
Dividend Score
 0  100
BA
A Dividend Quality Score (VZ) 83
B Dividend Quality Score (Peer Median) 62.5
Dividend Yield
1.58 5.83
BA
A Dividend Yield (VZ) 4.41
B Dividend Yield (Peer Median) 4.41
Analysis
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Fundamental Analysis

Capital Investment Strategy The company's level of capital investment seems appropriate to support the company's growth. Supporting Growth

Supporting Growth: Companies where 3 year changes in Capital and sustained Operating Returns (3-year average ROIC) are both above the peer median, suggesting that they are properly reinvesting in a strong performing business.
The company's level of capital investment seems appropriate to support the company's growth.

Earnings Leverage Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues. Revenues Focus

Revenues Focus: Companies where the yearly Revenue Growth is above peer median while Net Income Growth is below peer median suggesting that the company is focused on revenues.
Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.

Leverage & Liquidity

Relative Valuation Verizon Communications Inc. currently trades at a higher Price/Book ratio (14.88) than its peer median (1.78). P/B above peers

P/B above peers: Price to Book Value is trading above peer median.
Verizon Communications Inc. currently trades at a higher Price/Book ratio (14.88) than its peer median (1.78).

Valuation Drivers We classify VZ-US as Harvesting because of the market's relatively low growth expectations despite its relatively high returns. Harvesting

Harvesting: Companies with higher Operating Advantages (ROE) but lower Growth Advantages (P/E) usually suggests a focus on current operating results at the expense of long-term opportunities, so they are "Harvesting" out profits.
We classify VZ-US as Harvesting because of the market's relatively low growth expectations despite its relatively high returns.

Drivers of Margin The company's relatively high pre-tax margin suggests tight control on operating costs versus peers.

The company's relatively high pre-tax margin suggests tight control on operating costs versus peers.

Growth Expectations While VZ-US's revenue growth in recent years has been above the peer median, the stock's PE ratio is less than the peer median suggesting that the company's earnings may be peaking and the market expects a decline in its growth expectations. Expected Decline

Expected Decline: Companies that exhibit historical revenue growth (over 3 years) that is above peer median, but expected earnings growth (P/E) that is below peer median, indicative of the expectations for declining earnings.
While VZ-US's revenue growth in recent years has been above the peer median, the stock's PE ratio is less than the peer median suggesting that the company's earnings may be peaking and the market expects a decline in its growth expectations.

Operations Diagnostic VZ-US has relatively high profit margins while operating with median asset turns.

VZ-US has relatively high profit margins while operating with median asset turns.

Sustainability of Returns Over the last five years, VZ-US's return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.

Over the last five years, VZ-US's return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.

Likely Corporate Actions

Dividend Action

While VZ-US has a high quality dividend and a moderate cash cushion, its relative operating performance is not strong enough to suggest an increase in the dividend.

Equity Action

The company's current share price is not sufficiently lower than its 52-week high (currently about 8.74% below) and does not justify a share buyback as the best use of cash at this time.

M&A Action

While VZ-US has the size (by book value) to acquire other firms within this peer group and may need to do so to meet the market's growth expectations, it may not be able to add more goodwill to the balance sheet.

Dividend Quality

Dividend Coverage Moderate

The ending cash balance, with a dividend coverage of 1.43x, provides a moderate cushion in case of a significant reduction of cash flows in the future.

Dividend Quality High Quality

High Quality: Dividends that are fully covered from operating and investing cash flow, net of any cash outflow from debt repayments and net of a decrease in deposits (for banks) are considered to be high quality. For more information, please refer to the Corporate Actions report.
Over the last twelve months (prior to December 31, 2014), VZ-US paid a high quality dividend, which represents a yield of 4.41% at the current price.

Dividend Quality Trend Consistent High Quality

Consistent High Quality: Over the last 5 years, all dividends paid by the company were of high quality. For more information, please refer to the Corporate Actions report.
Dividends paid during each of the last five years were consistently of high quality.

Accounting Red Flags

Accounting Quality

VZ-US's strong relative net income margin for the last twelve months combined with a level of accruals that is around peer median suggest that the reported net income is supported by a reasonable level of accruals.

Management of Reserves

The company's accrual levels over the last twelve months are positive but around the peer median suggesting the company is recording a proper level of reserves relative to its peers.

Material Categories

Excluding the effects of change in revenue, the accounting categories causing the most impact on the movement of net income from the prior period to the current period are Intangible Assets, Accounts Payable and SG&A.
Characteristics
Key Valuation Items

Price to Book (P/B)

14.88

Price to Earnings (P/E)

21.14

Price to Sales

1.60

Price / EBITDA

5.63

Price to Assets

0.87

Price / FCF

15.14

EV / EBITDA

EV / FCF

Dividend Yield

4.41

PEG Ratio

Profitability

Gross Margin

60.71

EBIT Margin

15.42

Net Margin

7.57

FCF Margin

10.58

Operating Margin

15.42

Pre-Tax Margin

12.02

ROE

17.65

ROIC

7.46

ROA

3.80
Efficiency

Debt / Equity

828.25

Debt / Market

58.28

Debt / Book

89.23

Debt / EV

Coverage Ratio

31.70

Interest Coverage

3.99

Cash Days

93.75

Working Cap. Days

65.35

Receivable Days

37.96

Payable Days

31.07

Inventory Days

3.12

Sales / Assets

0.50
Growth

Earnings Growth YOY

-16.28

Revenue Growth YOY

5.42

Oper. CF Growth YOY

-21.09

EPS Growth YOY

-37.25

FCF Growth YOY

-39.50
Price History

Peers

FA Score

DQ Score

close

52 week range

48.97

45.09

53.66

USD

34.08

31.76

37.48

USD

18.15

12.80

18.19

USD

37.02

30.34

45.67

USD

35.91

28.63

42.14

USD

31.95

24.26

35.50

USD

25.31

21.30

28.41

USD

Company Profile

Verizon Communications Inc. operates as a holding company, which provides broadband and other wireless and wireline communications services to consumer, business, and government and wholesale customers. It also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers. The company operates its business through two segments: Verizon Wireless and Wireline. The Verizon Wireless segment provides communications products and services including wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States. The Wireline segment provides communications products and services including local exchange and long distance voice service, broadband video and data, IP network services, network access and other services to consumers, small businesses and carriers in the United States, as well as to businesses and government customers. Verizon Communications was founded in 1983 and is headquartered in New York, NY.

Closing Stock Price

USD 48.97

As of Date

February 20, 2015

One Year Performance

1.76642%

One Month Performance

1.63969%

Industry Group

Major Telecommunications

52 wk. Range

USD 45.09 - USD 53.66

Market Cap (Millions)

USD 203470

Total Shares Outstanding

4155
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 20, 2015

Filing Currency

USD

Listed Exchange

NYSE
Peers


Latest Tweets via StockTwits
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21
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Sandwich of Stock
22h
@ridethewave1966 that's a solid diff for me tho -- wanted the bigger screen for some time. $VZ sales approach was confusing as heck though.
Feb 21 8:34 PM
6
Rick M.
1d
@trader101 If you get in closer to 45, and $VZ manages to add subscribers 1qtr with record margins, plus the 5 blln buyback, you'll be good
Feb 21 5:40 PM
4
phil
1d
$VZ Can anyone give me a good reason to be in this? Don't say yield.
Feb 21 4:10 PM
4
MKTSTK
2d
Financial network visualization: clustering by @Estimize analyst coverage http://stks.co/f1owJ $DJIA $KO $JNJ $PFE $VZ $GE $DIS $T $DD $GS
Feb 20 11:17 PM
1
Ophir Gottlieb
2d
Largest Telecomm in $SPX : Revenue per Employee Compared --> http://stks.co/s1XP6 $VZ $T http://stks.co/f1opq
Feb 20 8:9 PM
Ophir Gottlieb
2d
$VZ Revenue per Employee ($M ) vs Revenue http://stks.co/g1oZ7 - Who Wants to Start a Wireless Network With Me? http://stks.co/r1Xe9
Feb 20 7:7 PM
Bidness Etc
2d
Frontier Communications Positive About Verizon Communications Deal http://stks.co/j1ojN $FTR $VZ
Feb 20 3:42 PM
Jason
2d
FCC Policies Challenged By Companies And Lawmakers $CMCSA $VZ http://stks.co/d1k6r
Feb 20 3:26 PM
Bidness Etc
2d
T-Mobile US Inc “Music Freedom” Be Curtailed - http://stks.co/d1k1c $TMUS $T $VZ
Feb 20 12:30 PM
John dufal
3d
@trader101 funny, been thinking of moving out of $VZ for a few months. 1 of 1st stocks I bought years ago. Never added. In @ mid 20s
Feb 20 2:42 AM
2
phil
3d
@jdufal our portfolios are scary similar, $DIS $CELG $LMT are my core. Why in $VZ ? Id rather $RRD for yield or $AMT for industry
Feb 20 2:21 AM
2
MaxInvestor
3d
$BBRY Classic comes to Verizon on the 26th: http://stks.co/e1jyp $VZ
Feb 20 12:57 AM
1
DailyStockPlays.com
3d
NR7 Inside Day Stocks for 2/20/15 http://stks.co/p1XTk $CSCO $FCX $VZ $SPLS $ABBV $DIS $D $AEO $KBH $NTAP $HOT $SNDK
Feb 19 9:45 PM
Dave Neville
3d
Akamai Spikes Post-Q4 Earnings; Amazon Interested? http://stks.co/t1XND #IBDNews via @IBDinvestors $AKAM $VZ $AAPL $LVLT $LLNW
Feb 19 9:28 PM
2
John dufal
3d
Top Holdings LT Port $DIS , $SBUX $CELG $FB $BX $LMT $JPM $GILD $V $UA $EOG $SWKS $MO $ETN $VZ trade positions $YNDX $SUNE $NVAX $CTRL $FEYE
Feb 19 9:26 PM
2 1
NGC
3d
$LLNW They have been building up to be acquired. $VZ was their main target but after $VZ bought their competitor, the search is on! 4.5 PT
Feb 19 7:3 PM
1 1
ARN Insider Trades
3d
Verizon Communications SVP Anthony Skiadas Sells $132,746 in $VZ http://stks.co/c1jl4
Feb 19 6:10 PM
Insider Trades
3d
$VZ : New Insider Transaction on VZ by SVP & Controller Skiadas Anthony T: http://stks.co/d1jgx
Feb 19 5:28 PM
Conference Call Transcripts
3d
Verizon Communications Inc.'s SVP & Controller just disposed of 2,708 shares http://stks.co/b1jdP $VZ
Feb 19 5:23 PM
Sure Dividend
3d
Improve your dividend portfolio with these free dividend stock resources: http://stks.co/s1WfD $PM $BRK.A $AAPL $MO $T $JNJ $XOM $VZ $PG
Feb 19 12:43 PM
1 1
Bidness Etc
3d
Verizon is reportedly altering its prepaid plans - http://stks.co/s1Wf7 $VZ
Feb 19 12:40 PM
Bidness Etc
3d
Verizon is reportedly altering its prepaid plans - http://stks.co/c1jad $VZ
Feb 19 12:40 PM
Fingraphs.com André Owczarczak
3d
$VZ Potential intermediate top in an Uptrend on a Weekly-Daily-Hourly charts http://stks.co/f1o3t
Feb 19 11:17 AM
Stan Bokov
4d
Feb 19 2:40 AM
Rick M.
4d
$VZ Good Price To Value, Great dividend, Super well discipline management willing to return to shareholders, couldn't be happier, adding.
Feb 19 1:6 AM
v2 Ratings
4d
$VZ looks attractive (rated 8.6 as price is down to 48.94). Price vs ratings chart: http://stks.co/r1WkC
Feb 18 9:50 PM
Insider Trades
4d
$VZ : New Insider Transaction on VZ by EVP & Chief Admin. Officer REED MARC C: http://stks.co/q1WcN
Feb 18 8:48 PM
Conference Call Transcripts
4d
EVP - Strat of Verizon Communications Inc. just picked up 7,746 shares http://stks.co/b1jD5 $VZ
Feb 18 8:46 PM
Conference Call Transcripts
4d
Verizon Communications Inc. just filed its Statement of changes in beneficial ownership of securities http://stks.co/p1Wu8 $VZ
Feb 18 8:46 PM
Brian Nichols
4d
$VZ would be wise to lease $DISH spectrum. It can't afford another $35-$40 billion for AWS-4 spectrum block. Better lease and pay off debt
Feb 18 7:29 PM
Please Login to see your stream! No Twits! Your stream is empty No Twits for VZ!

Closing Stock Price

USD 48.97

As of Date

February 20, 2015

One Year Performance

1.77%

One Month Performance

1.64%

Industry Group

Major Telecommunications

52 wk. Range

USD 45.09 - USD 53.66

Market Cap (Millions)

USD 203,470

Total Shares Outstanding (Millions)

4,155.00
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 20, 2015

Filing Currency

USD

Listed Exchange

NYSE
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