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…