Verizon Communications Inc. (NYSE:VZ) March 18, 2015

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VZ-US
Implied Price
OVERVALUED
35.81 53.66
A Price as of Close Mar 16 49.27 USD
B CapitalCube Median Implied Price 37.13 USD * CapitalCube Price is over trading range * CapitalCube Price is below trading range
CapitalCube Estimate Range 35.81 - 38.44 USD NA
52 Week Range 45.09 - 53.66 USD
Earnings Momentum Score
 0  100
A Earnings Score (VZ) 25.40
B Earnings Score(Peer Median) 25.76
Latest Filing date December 31, 2014
Fundamental Score
 0  100
A Fundamental Score (VZ) 72
B Fundamental Score(Peer Median) 54.5
Dividend Score
 0  100
A Dividend Quality Score (VZ) 83
B Dividend Quality Score (Peer Median) 62.5
Dividend Yield
1.52 6.26
A Dividend Yield (VZ) 4.38
B Dividend Yield (Peer Median) 4.38
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 VZ-US might have enough interest coverage to take-on additional debt prudently. Some Capacity

Some Capacity: Companies that have some debt capacity based on interest coverage greater than a 2.5x threshold, even though D/EV exceeds a 25 % threshold, suggesting there is some additional borrowing capacity available.
VZ-US might have enough interest coverage to take-on additional debt prudently.

Relative Valuation Verizon Communications Inc. currently trades at a higher Price/Book ratio (14.97) than its peer median (1.82). 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 (14.97) than its peer median (1.82).

Valuation Drivers VZ-US's operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.

VZ-US's operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.

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 revenues in recent years have grown faster than the peer median, the market gives the stock a PE ratio that is around peer median suggesting that the market has some questions about the company's long-term strategy.

While VZ-US's revenues in recent years have grown faster than the peer median, the market gives the stock a PE ratio that is around peer median suggesting that the market has some questions about the company's long-term strategy.

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 8.18% 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 4.38% 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 Restructuring Expense, Intangible Assets and PP&E.
Characteristics
Key Valuation Items

Price to Book (P/B)

14.97

Price to Earnings (P/E)

21.27

Price to Sales

1.61

Price / EBITDA

4.73

Price to Assets

0.88

Price / FCF

15.23

EV / EBITDA

6.88

EV / FCF

22.16

Dividend Yield

4.38

PEG Ratio

Profitability

Gross Margin

60.73

EBIT Margin

21.04

Net Margin

7.57

FCF Margin

10.58

Operating Margin

21.04

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

Debt / EV

38.03

Coverage Ratio

34.69

Interest Coverage

5.05

Cash Days

93.75

Working Cap. Days

65.35

Receivable Days

37.96

Payable Days

15.15

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

49.27

45.09

53.66

USD

33.06

32.07

37.48

USD

34.50

30.64

45.67

USD

32.47

24.26

35.50

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 49.27

As of Date

March 16, 2015

One Year Performance

6.9227430555556%

One Month Performance

-0.081119448387749%

Industry Group

Major Telecommunications

52 wk. Range

USD 45.09 - USD 53.66

Market Cap (Millions)

USD 204736.95216

Total Shares Outstanding

4154.96424
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 21, 2015

Filing Currency

USD

Listed Exchange

NYSE
Peers


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Live Squawk
7h
$VZ Verizon Said To Plan Mobile TV Service As Early As June, Gain $VIA Viacom Rights
Mar 17 11:34 PM
Steven Spencer
7h
FCC Chairman Says Obama’s Net Neutrality Statement Influenced Rule http://stks.co/i1z6k via @WSJ $CMCSA $NFLX $CHTR $T $VZ
Mar 17 11:9 PM
Mar 17 9:20 PM
Mar 17 8:46 PM
Nick Raich
10h
Here are Verizon's weakening EPS estimate trends in the last 6 months. $VZ #ECB #Euro $DXY
Mar 17 7:50 PM
Nick Raich
10h
We upgraded $EFA to a 10% OW w/ U.S. stocks at a 5% UW. Why? See our EPS est trends on $VLKAY vs $F $AZN vs $MRK & $VOD vs $VZ #deltas #QE
Mar 17 7:44 PM
1
kimanga
12h
Anyone imagining how if the market interprets FOMC meeting negatively how it might send this market down $SPY $ES_F $VZ $TSLA $EURUSD
Mar 17 6:13 PM
4 1
kimanga
13h
I'm currently LONG $VZ Mar27'15 49.5 PUT @ 0.71 fr 2015-03-16. Pos has been +$$ few times by >0.12 or 16% but greed. Should be ok though
Mar 17 5:28 PM
TheStreet
14h
Warren Buffett Loves These 4 Tech Stocks $VZ http://stks.co/s1hjn
Mar 17 4:31 PM
Paul Maior
15h
Mar 17 3:34 PM
1
Jason
16h
$S Persists To Save Its Customers Money And Simplify- $VZ $GE http://stks.co/j1yz1
Mar 17 2:24 PM
Capital Market Laboratories
19h
$VZ Earnings Improving http://stks.co/b1tvG #CML
Mar 17 11:6 AM
Antonio Costa
20h
$SPEX $VZ Markman Hearing Held as Scheduled in Verizon Case http://stks.co/e1u8K
Mar 17 10:33 AM
Capital Market Laboratories
22h
$T , $VZ , $CTL , $FTR , $WIN Revenue Trend Comparison http://stks.co/c1u73 #CML
Mar 17 7:47 AM
Capital Market Laboratories
23h
$VZ Revenue Rising http://stks.co/s1hX5 #CML
Mar 17 6:52 AM
TalkMarkets
24h
Should You Cancel Your Phone, TV And Internet Service Contracts? $DTV $CVC $TWX $VZ $T $DISH $CCOI $CCV http://stks.co/j1yq1
Mar 17 6:9 AM
Capital Market Laboratories
1d
$VZ , $T , $CTL , $FTR , $WIN Revenue Trend Comparison http://stks.co/s1hWg #CML
Mar 17 5:52 AM
Elle2105
1d
$VZ On Lightning Round today. http://stks.co/f1ykV
Mar 17 2:43 AM
Mar 17 2:11 AM
PearTreeCapital
1d
$VZ -- another wedge I'm watching
Mar 16 11:0 PM
1
Capital Market Laboratories
1d
$T , $VZ , $CTL , $FTR , $WIN Revenue Trend Comparison http://stks.co/e1tut #CML
Mar 16 8:33 PM
Capital Market Laboratories
1d
$VZ Earnings Growing http://stks.co/r1hY8 #CML
Mar 16 7:34 PM
The Day Trading Academy
1d
$VZ up 8% since recommendation on 12/15/14. Just $1.39 from the short term target of $50.69. http://stks.co/p1hgN
Mar 16 6:2 PM
Capital Market Laboratories
1d
$VZ Revenue Growing http://stks.co/f1yWL #CML
Mar 16 5:59 PM
TalkMarkets
1d
Should You Cancel Your Phone, TV And Internet Service Contracts? $DTV $CVC $TWX $VZ $T $DISH $CCOI $CCV http://stks.co/f1yVL
Mar 16 5:16 PM
BNK Invest
1d
One Put, One Call Option To Know About for Verizon Communications $VZ http://stks.co/r1hSB
Mar 16 4:24 PM
F.A.S.T. Graphs, Inc.
1d
Live Interactive Graphs on $T $VZ in article: AT&T Vs. Verizon-Who Wins The Battle Between Growth, Yield And Value? http://stks.co/i1yP6
Mar 16 2:6 PM
Zacks.com
1d
Telecom behemoths are starting to enter the TV internet race. Will the investment pay off? $DISH $VZ http://stks.co/c1tks
Mar 16 1:42 PM
Conference Call Transcripts
1d
Verizon Communications Inc.'s Chairman and CEO was just granted 223 restricted shares http://stks.co/s1h8K $VZ
Mar 16 12:9 PM
Conference Call Transcripts
1d
Verizon Communications Inc.'s EVP&Pres. of Strat Initiatives was just granted 124 restricted shares http://stks.co/h1yWH $VZ
Mar 16 12:9 PM
Please Login to see your stream! No Twits! Your stream is empty No Twits for VZ!

Closing Stock Price

USD 49.27

As of Date

March 16, 2015

One Year Performance

6.92%

One Month Performance

-0.08%

Industry Group

Major Telecommunications

52 wk. Range

USD 45.09 - USD 53.66

Market Cap (Millions)

USD 204,736.952

Total Shares Outstanding (Millions)

4,154.96
Latest Filing Dates

Annual

December 31, 2014

Semi Annual

N/A

Quarterly

December 31, 2014

Next Release Date

April 21, 2015

Filing Currency

USD

Listed Exchange

NYSE
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