Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, 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 somewhat disappointing return on equity.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income increased by 15.5% when compared to the same quarter one year prior, going from $1,379.00 million to $1,593.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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 62.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.49% trails the industry average.
- Net operating cash flow has slightly increased to $9,487.00 million or 8.79% 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 16.08%.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
Verizon Communications Inc. provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Verizon has a market cap of $125.91 billion and is part of the technology sector and telecommunications industry. The company has a P/E ratio of 40.9, above the S&P 500 P/E ratio of 17.7. Shares are up 10% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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