NEW YORK (TheStreet) -- The German government will end its networking contract with Verizon Communications (VZ) - Get Free Report next year, due to concerns regarding the NSA's surveillance programs, Bloombergreports.
Germany's government is applying "especially high" security standards to its communications infrastructure in the wake of the NSA surveillance program incident.
The German government will not renew the contract with Verizon as the country's new security policies require telecommunications providers to confirm they are not bound to share information with foreign governments, Bloomberg added. In June 2013, Verizon was under a court order by the Obama administration to provide data regarding phone usages by millions of its customers.
Shares of Verizon are down -0.59% to $49.12 in afternoon trading on Thursday.
Separately, TheStreet Ratings team rates VERIZON COMMUNICATIONS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, compelling growth in net income and impressive record of earnings per share growth. 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 analysis by TheStreet Ratings Team goes as follows:
- VZ's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 4.8%. 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 63.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.80% is above that of the industry average.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 102.2% when compared to the same quarter one year prior, rising from $1,952.00 million to $3,947.00 million.
- VERIZON COMMUNICATIONS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC increased its bottom line by earning $4.00 versus $0.31 in the prior year. For the next year, the market is expecting a contraction of 12.1% in earnings ($3.52 versus $4.00).
- You can view the full analysis from the report here: VZ Ratings Report
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.