Verizon: Stable Q4 & Strategic Progress Not Priced In At 10x P/E

(Preview) Company Update (VZ US) (Buy)

Summary

• Verizon's Q4 2021 results on Tuesday showed stable operational trends, with 2022 initiatives like 5G and Fixed Wireless likely not priced in.

• The key Consumer Wireless business showed continuing growth in subscribers and revenue per subscriber; net adds accelerated.

• Consumer Wireline net adds were smaller, but Fixed Wireless accelerated from a low base; the Business segment declined moderately.

• 2022 guidance is for moderate revenue and EBITDA growth. The P/E is below 10x and the FCF Yield is near 10% (excluding C-band CapEx).

• With shares at $52.98, we expect a total return of 73% (16.1% annualized) by 2025 year-end. The Dividend Yield is 4.8%. Buy

Introduction

We review our Verizon Communications Inc. investment case after Q4 2021 results on Tuesday (January 25). Verizon stock closed down 0.2% for the day, outperforming the S&P 500 index, which was down 1.2%.

We initiated our Buy rating on Verizon in September 2021. Since then VZ shares have lost 1.5% (after dividends).

Operational tre…