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Verizon Communications Inc's Buy Recommendation Affirmed

Stocks in this article: VZ

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Verizon Communications (NYSE: VZ) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • VZ's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, VERIZON COMMUNICATIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 61.49%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.31% is above that of the industry average.
  • Net operating cash flow has significantly increased by 55.03% to $10,431.00 million when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of 1.58%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.

Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Verizon has a market cap of $136.9 billion and is part of the technology sector and telecommunications industry. The company has a P/E ratio of 17.00, below the S&P 500 P/E ratio of 18.00. Shares are down 3.1% year to date as of the close of trading on Friday.

You can view the full Verizon Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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