Tags: Verizon | Communications | telecom | VZ

Verizon Among Few Standing After Telecom Scrum

By    |   Thursday, 07 Jun 2012 12:04 PM

Verizon Communications (VZ) is one of the few winners standing in the scrum after telecom deregulation and the rush to build out U.S. cellular coverage over the past few decades. While many wireless firms are cutting each other’s throats to keep customers, Verizon has managed to grow itself into new business lines while keeping its lead in wireless.

Verizon Communications is one of the world’s leading providers of communications, information and entertainment products and services to consumers, businesses and governmental agencies with a presence in more than 150 countries around the world.

Formerly known as Bell Atlantic Corporation, Verizon was created following a merger with GTE Corporation. Verizon has two primary reportable segments, Verizon Wireless and Wireline.

Verizon Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States.

Wireline’s communications products and services include voice, Internet access, broadband video and data, Internet protocol network services, network access, long distance and other services. 

Verizon Communications has a market cap of $117.05 billion in a sector, telecommunication services, where the average company size is $12.88 billion. Its trailing 12-month P/E ratio is 43.83 and its five-year projected price-to-earnings-growth (PEG) ratio is 4.07, compared to 3.02 for the sector.

Its projected earnings per share growth for the coming year is 11.60 percent, compared to a sector average of 8.89 percent.

Strong margin


Wall Street is generally bullish on Verizon, with buy or outperform calls in from Goldman Sachs, Jefferies, and UBS.

“In our view, with its strong operating margin and perception of network quality, the company's wireless segment should be a driver for VZ in 2012, partially offset by high competition and a push to expand its smartphone base,” S&P analysts wrote in late May, giving the stock a neutral rating.

“We are encouraged by the relative stability in VZ's wireline segment over the past six months, helped by FiOS gains and by the company's above-average dividend. We believe VZ's pending acquisition of spectrum from a cable consortium will help alleviate future network congestion. While VZ's fundamentals appear sound to us, we think this is reflected in the stock's valuation.”

Verizon Communications next reports on July 19.

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