Rating Change #2
Verizon Communications Inc
(VZ - Get Report)
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- VZ's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 62.80%. It has increased from the same quarter the previous year.
- Net operating cash flow has increased to $7,531.00 million or 26.42% when compared to the same quarter last year. Despite an increase in cash flow, VERIZON COMMUNICATIONS INC's average is still marginally south of the industry average growth rate of 35.78%.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 35.18% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- VERIZON COMMUNICATIONS INC has improved earnings per share by 15.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $0.31 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.75 versus $0.31).
Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 159.8, above the S&P 500 P/E ratio of 17.7. Verizon has a market cap of $143.67 billion and is part of the technology sector and telecommunications industry. Shares are up 17.7% year to date as of the close of trading on Friday.
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