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General information
Verizon Communications Inc. is an integrated telecommunications company that provides wire line voice and data services, wireless services, Internet services, and published directory information. The Company also provides network services for the federal government including business phone lines, data services, telecommunications equipment, and payphones.
  • Bad financial results growth rate -7.9% (average between last period year over year growth for revenue and EBITDA), there is slowdown compared to average historical growth rates (3.7%)
  • Dividend yield for the last twelve months 4.4%
  • Free cash flow yield 3.0% (LTM)
  • Share price is 27.7% higher than minimum and 9.3% lower than maximum for the last 3 years
  • The company is undervalued by EV / LTM EBITDA multiple compared to target level (7.9x vs 8.5x)
  • Fundamental value created in LTM (estimate) -20.2%
Key Financials
Ticker: VZ
Share price, USD: 56.31
Common stocks: 4 135 784 208
Dividend Yield:  4.4%
FCF Yield LTM: 3.0%
EV / LTM EBITDA: 7.9x
Last revenue growth (y/y):  -4.1%
Last growth of EBITDA (y/y):  -11.6%
Historical revenue growth:  1.1%
Historical growth of EBITDA:  6.3%
Target EV / EBITDA (hist 75% percentile): 8.5x
Fundamental value created in LTM: -20.2%
EV / LTM EBITDA mutiple calculation
Market Cap ($m): 232 886
Net Debt ($m): 129 687
EV (Enterprise Value): 362 573
EBITDA LTM ($m): 46 008
EV / LTM EBITDA: 7.9x

Revenue and EBITDA

Quarterly values ($m)

Change (y/y)

Cash Flow

Free Cash Flow ($m)

Net Debt / Cash and Equivalents ($m)

Share price and dividends

Share price

Payment USD per share

Multiple and potential

EV / LTM EBITDA and 75% percentile

Potential dynamics

Value Creation

Fundamental Value Creation is calculated as ratio of value created in the last period to current market cap of the company.

The fundamental value can be created in two ways:
• cash generation in form of dividend payments or debt reduction or share buybacks
• growth of the company enterprise value through improving financial results

The growth of enterprise value in the last period is estimated as product of:
• annualized increase of EBITDA in the last reporting period year over year
• relevant EV/EBITDA multiple (average between actual EV/EBITDA for the company and average general level of 10.0x is applied)

Parameter
#
Formula
Value
    
    
            EBITDA (pre LTM Q)
(1)
13 428
            EBITDA (last Q)
(2)
11 870
            EBITDA LTM
(3)
46 008
    
    
        EBITDA LTM / last Q
(4)
(3) / (2)
3.876
    Gain of EBITDA (mln $)
(5)
( (2)-(1) ) * (4)
-6 039
    
    
            EV
(6)
365 166
        Mult
(7)
(6) / (3)
7.9x
        Mult common
(8)
const
10.0x
    Mult avg
(9)
avgerage
9.0x
    
    
    Equity+
(10)
(5) * (9)
-54 159
    FCF LTM
(11)
7 088
    
    
Value+
(12)
(10) + (11)
-47 071
Cap
(13)
232 886
    
    
Fundamental value creation
(14)
(12) / (13)
-20.2%

Potential

EBITDA LTM       46 008
 
EBITDA E       45 569
Mult aim       8.5x
 
EV E       387 999
NetDebt corr       131 717
 
Cap E       256 282
Cap       232 886
Growth potential            10.0%