In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Verizon Communications (NYSE:VZ) and its primary competitors in the Diversified Telecommunication Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company’s performance within the industry.
Verizon Communications Background
Wireless services account for 75% of Verizon Communications’ total service revenue and nearly all of its operating income. The firm serves about 94 million postpaid and 20 million prepaid phone customers via its nationwide network, making it the largest US wireless carrier. Fixed-line telecom operations include local networks in the Northeast that reach about 30 million homes and businesses, including about 20 million served by the Fios fiber-optic network. Verizon closed its acquisition of Frontier Communications in January, adding networks that reach another 15 million locations, including 9 million with fiber. These networks serve about 11 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, using a mix of its own and other networks.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Verizon Communications Inc | 11.60 | 1.90 | 1.44 | 2.24% | $12.81 | $20.48 | 7.57% |
| AT&T Inc | 8.98 | 1.74 | 1.56 | 3.39% | $17.67 | $18.89 | 8.98% |
| Comcast Corp | 5.72 | 1.15 | 0.92 | 2.24% | $7.47 | $22.0 | 1.24% |
| BCE Inc | 5.14 | 1.70 | 1.33 | 26.67% | $6.82 | $4.28 | 1.31% |
| TELUS Corp | 24.94 | 1.90 | 1.45 | 3.17% | $2.0 | $3.12 | 0.5% |
| IDT Corp | 15.06 | 3.79 | 0.98 | 7.15% | $0.04 | $0.12 | 4.26% |
| Average | 11.97 | 2.06 | 1.25 | 8.52% | $6.8 | $9.68 | 3.26% |
Upon analyzing Verizon Communications, the following trends can be observed:
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A Price to Earnings ratio of 11.6 significantly below the industry average by 0.97x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The current Price to Book ratio of 1.9, which is 0.92x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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With a relatively high Price to Sales ratio of 1.44, which is 1.15x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 2.24% that is 6.28% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $12.81 Billion, which is 1.88x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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With higher gross profit of $20.48 Billion, which indicates 2.12x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company’s revenue growth of 7.57% exceeds the industry average of 3.26%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company’s financial health and its reliance on debt financing.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company’s financial health and risk profile, aiding in informed decision-making.
By analyzing Verizon Communications in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Verizon Communications falls in the middle of the list when considering the debt-to-equity ratio.
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This indicates that the company has a moderate level of debt relative to its equity with a debt-to-equity ratio of 1.74, suggesting a balanced financial structure with a reasonable debt-equitymix.
Key Takeaways
For Verizon Communications, the PE and PB ratios are low compared to peers, indicating potential undervaluation. However, the high PS ratio suggests the stock may be overvalued based on revenue. The low ROE implies lower profitability compared to industry peers, while high EBITDA and gross profit signify strong operational performance. Additionally, the high revenue growth indicates a positive outlook for the company within the Diversified Telecommunication Services industry.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
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