Verizon Communications (VZ:NYS) Fundamental Valuation Report

Verizon Communications (VZ:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Verizon Communications(VZ:NYS)

Communication Services:Telecom Services

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$56.91 (USD) 05/21/2021

Weighted Valuation
$60.25 (USD)

Overall Rating
Undervalued by 5.9%

Valuation Models Comparables: $124.27 (USD)
(in order of importance) Multiples: $71.14 (USD)
Adjusted Book Value: $109.97 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $60.25 this stock is Undervalued

Company Overview (VZ:NYS USD)

Price 56.91
Range 56.74 – 57.30
52 week 53.16 – 61.74
Open 57.06
Vol / Avg. 15.43M/17.73M
Mkt cap 235.61B
P/E 12.45
Div/yield 2.49/0.04
EPS 4.30
Shares 4.14B
Beta 0.47

Company Description

Verizon is now primarily a wireless business (more than 70% of revenue and nearly all operating income). It serves about 91 million postpaid and 4 million prepaid phone customers and connects another 25 million data devices, like tablets, via its nationwide network, making it the largest U.S. wireless carrier. The firm has agreed to acquire Tracfone, a wireless reseller that serves about 20 million prepaid customers in the U.S., from America Movil. Fixed-line telecom operations include local networks (12% of revenue) in the Northeast, which reach about 25 million homes and businesses, and nationwide enterprise services (10%). Verizon Media Group, the online media and advertising firm formed with the acquisitions of AOL and Yahoo, provides the remainder of revenue.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for VZ:NYS

Using a discounted cash flow model we generated an intrinsic value of $170.75 (USD) for VZ:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

VZ:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $170.75 1% 5% 1% 5%
WACC (or Ke) 4.32 $230.23 $133.65
Terminal Growth Rate 0.00 $136.50 $225.66
Tax Rate 0.23 $184.92 $156.58
Cash Flow 50,823,100,000 $159.89 $181.60
Capital Expenditures 0 $170.75 $170.75
Long Term Debt 106,591,000,000 $172.04 $169.46

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $82.37 (USD) for VZ:NYS. We also generated a valuation of $124.27 (USD) using other metrics and comparables.
The comparable companies were T-Mobile US (TMUS:NAS), Zoom Video Communications (ZM:NAS) and AT&T (T:NYS).

Company VZ:NYS End Date Value
Earnings/Share $4.57 (USD)
Book Value/Share $17.21 (USD)
Sales/Share $31.28 (USD)
Cash Flow/Share $10.29 (USD)
EBITDA/Share $10.85 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 17.5
$160.48 (USD) 0.0
$54.03 (USD) -40.3
$70.76 (USD) -32.0
$111.40 (USD) -14.8
VZ:NYS Ratios Used Average Values TMUS:NAS ZM:NAS T:NYS
12.45 PE Ratio 104.15 67.69 140.62 0.00
3.31 PB Ratio 9.33 2.56 24.13 1.29
1.82 PS Ratio 13.01 2.21 35.58 1.25
5.53 PCF Ratio 28.31 15.94 64.12 4.87
8.73 EV to EBITDA 49.94 11.55 129.27 8.99


Using a multiples approach we generated a valuation of  $71.14 (USD) for VZ:NYS

Company VZ:NYS End Date Value
Earnings/Share $4.57 (USD)
Book Value/Share $17.21 (USD)
Sales/Share $31.28 (USD)
Cash Flow/Share $10.29 (USD)
EBITDA/Share $10.85 (USD)
Price Based on Comps Adjustment Factor
$62.42 (USD) 0
$83.08 (USD) 0
$54.23 (USD) 0
$69.96 (USD) 0
$86.00 (USD) 0
Ratios Ratio Average
PE Ratio 13.66
PB Ratio 4.83
PS Ratio 1.73
PCF Ratio 6.80
EV to EBITDA 7.93

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  VZ:NYS for the last 10 years was  6.39

We ran the Adjusted Book Value for  VZ:NYS and generated a book value of  $17.21 (USD)
By multiplying these we get an adjusted valuation of  $109.97 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for VZ:NYS. The 4 analysts have a concensus valuation for VZ:NYS for 2021 of $60.25 (USD).

VZ:NYS Verizon Communications

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 6 0 3.2857 Hold 2021-5-20

Current Price: 56.91 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 5.05 5.18 5.40
# EPS Analysts 7 7 2
Mean Revenue 133,758.40 136,726.60 141,414.30
# Revenue Analysts 5 5 3
Mean Target Price 60.25
Mean Cash Flow 9.26 9.54 9.74
Mean EBITDA 48,431.80 48,797.80 50,823.10
Mean Net Income 20,993.60 21,691.80 22,377.40
Mean Debt Outstanding 153,757.90 147,551.60 145,248.40
Mean Tax Rate 23.50 23.50
Mean Growth Rate 3.41
Mean Capital Expenditure 20,507.80 21,977.80 20,877.20

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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