In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Verizon Communications VZ alongside its primary competitors in the Diversified Telecommunication Services industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on company's performance within the industry.
Verizon Communications Background
Verizon Communications is primarily a wireless business (it provides about 70% of service revenue and nearly all operating income). It serves about 92 million postpaid and 22 million prepaid phone customers (following the acquisition of Tracfone) via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks in the Northeast, which reach about 25 million homes and businesses and serve about 8 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, often using a mixture of its own and other carriers' networks.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Verizon Communications Inc | 7.96 | 1.70 | 1.24 | 4.94% | $12.06 | $19.9 | -2.64% |
| Chunghwa Telecom Co Ltd | 25.01 | 2.46 | 4.21 | 2.46% | $21.63 | $19.6 | 0.76% |
| PT Telkom Indonesia (Persero) Tbk | 16.71 | 3.02 | 2.64 | 5.3% | $20330.0 | $26634.0 | 2.36% |
| Telefonica Brasil SA | 18.33 | 1.20 | 1.63 | 2.13% | $5.11 | $5.66 | 7.48% |
| KT Corp | 7.17 | 0.50 | 0.32 | 1.58% | $1377.46 | $4221.64 | 3.4% |
| Frontier Communications Parent Inc | 35.22 | 1.12 | 1.03 | 0.21% | $0.54 | $0.88 | -0.35% |
| Telecom Argentina SA | 10.37 | 1.69 | 4.33 | 2.15% | $134.1 | $245.68 | -5.61% |
| Shenandoah Telecommunications Co | 294.14 | 1.58 | 3.65 | 0.24% | $0.02 | $0.04 | 7.35% |
| IDT Corp | 23.67 | 4.32 | 0.72 | 3.89% | $0.02 | $0.09 | -6.4% |
| Ooma Inc | 154.57 | 3.60 | 1.20 | 3.07% | $0.0 | $0.04 | 5.61% |
| Average | 65.02 | 2.17 | 2.19 | 2.34% | $2429.88 | $3458.63 | 1.62% |
By analyzing Verizon Communications, we can infer the following trends:
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With a Price to Earnings ratio of 7.96, which is 0.12x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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The current Price to Book ratio of 1.7, which is 0.78x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 1.24, which is 0.57x the industry average.
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The company has a higher Return on Equity (ROE) of 4.94%, which is 2.6% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $12.06 Billion, which is 0.0x below the industry average. This potentially indicates lower profitability or financial challenges.
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The gross profit of $19.9 Billion is 0.01x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company's revenue growth of -2.64% is significantly lower compared to the industry average of 1.62%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When evaluating Verizon Communications alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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As Verizon Communications is in the middle of the list in terms of the debt-to-equity ratio, it suggests that the company has a moderate debt-to-equity ratio of 1.76 compared to the other companies.
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This position indicates a relatively balanced financial structure, where the company maintains a reasonable level of debt while also leveraging equity for financing its operations.
Key Takeaways
Verizon Communications has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the stock is undervalued based on its book value. The low PS ratio indicates that the stock is trading at a lower price relative to its sales. On the other hand, Verizon Communications has a high ROE, indicating that it is generating a high return on its shareholders' equity. The low EBITDA suggests that the company's operating profitability is relatively low. The low gross profit indicates that the company's revenue after deducting the cost of goods sold is relatively low. Lastly, the low revenue growth suggests that the company's sales growth is relatively slow compared to its peers in the industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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