Verizon Communications Inc

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VZ : NYSE : Technology
$52.27 -0.23 | -0.44%
Today's Range: 52.03 - 52.59
Avg. Daily Volume: 13,299,900
08/30/16 - 3:59 PM ET

Financial Analysis


VERIZON COMMUNICATIONS INC's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. VERIZON COMMUNICATIONS INC has very weak liquidity. Currently, the Quick Ratio is 0.47 which clearly shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 68.58% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)30532.032224.0
EBITDA ($mil)7529.011801.0
EBIT ($mil)3547.07821.0
Net Income ($mil)702.04231.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)2857.03317.0
Total Assets ($mil)231870.0240753.0
Total Debt ($mil)99725.0113671.0
Equity ($mil)19244.011415.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin59.9761.37
EBITDA Margin24.6536.62
Operating Margin11.6224.27
Sales Turnover0.560.54
Return on Assets6.224.11
Return on Equity75.0486.85
Debt Q2 FY16 Q2 FY15
Current Ratio0.610.7
Debt/Capital0.840.91
Interest Expense1200.01378.0
Interest Coverage2.965.68


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)4076.34065.69
Div / share0.570.55
EPS0.171.04
Book value / share4.722.81
Institutional Own % n/a n/a
Avg Daily Volume1.3218598E71.3150836E7

Valuation


BUY. This stock's P/E ratio indicates a discount compared to an average of 16.90 for the Diversified Telecommunication Services industry and a significant discount compared to the S&P 500 average of 25.13. For additional comparison, its price-to-book ratio of 11.17 indicates a significant premium versus the S&P 500 average of 2.82 and a significant premium versus the industry average of 4.08. The price-to-sales ratio is below both the S&P 500 average and the industry average, indicating a discount. The valuation analysis reveals that, VERIZON COMMUNICATIONS INC seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
VZ 14.90 Peers 16.90   VZ 6.55 Peers 6.80

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

VZ is trading at a discount to its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

VZ is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
VZ 13.06 Peers 18.68   VZ NM Peers 0.98

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

VZ is trading at a significant discount to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

VZ's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
VZ 11.17 Peers 4.08   VZ 46.88 Peers 58.03

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

VZ is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, VZ is expected to trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
VZ 1.65 Peers 1.74   VZ 0.87 Peers 8.36

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

VZ is trading at a valuation on par with its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

VZ significantly trails its peers on the basis of sales growth

 

 

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