Verizon Communications Incorporation Analysis
Collect and evaluate the data about stock performance of the assigned company for the last one year.
1) Find the market ratios for the company for the last 1-3 years and its major competitor for the last year in the Internet.
• Price/Earnings ratio
• Market/Book ratio (also called (Price/Book ratio)
• Earnings per share
• Dividends per share
• Other market ratios on your choice
These ratios are available on www(dot)morningstar(dot)com > Company’s page – under Valuation, Financials, and under Dividends
You can find these ratios in the Internet or calculate them. If you use published ratios you must indicate that and cite their source.
a. Present the market ratios as the table(s) in your project.
b. Write about 1 page of analysis of the market ratio results that you found. Compare the market ratio results against the industry or main competitor. In your report please answer the question: Are the common stockholders receiving an adequate return on their investment?
c. Compare the P/E ratio of your company with the industry average or 5-year average. Is the stock overvalued, undervalued, or properly valued? Why?
d. In accordance with your findings, is it reasonable to buy the stock? Please explain your answers.
-2) Analysis of the historical stock prices trend for the last year. (15% of the project grade)
a. Collect and evaluate the data about stock prices of the assigned company for the last one year for the company and its major competitor.
b. Create the chart(s) using the stock price chart tools on the websites or Excel. Present the chart(s) in your project.
c. Write about 0.5 page of analysis the historic stock prices trend for the last year.
In accordance with your findings, is it reasonable to buy the stock? Why? Please explain your answer.
Verizon Communications Incorporation Analysis
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Table of Content
TOC \o "1-3" \h \z \u 1. Verizon Communications Company Background PAGEREF _Toc84000272 \h 32. Market Ratios for the Verizon Company for the Last 1 to 3 Years and Competitor, AT&T Incorporation PAGEREF _Toc84000273 \h 3a. Market Ratios Table PAGEREF _Toc84000274 \h 3b. Comparison of the Market Ratios of Verizon Communications and AT&T Incorporation PAGEREF _Toc84000275 \h 4c. P/E (Price to Earnings Ratio) of Verizon Communications Comparison with Industry Average PAGEREF _Toc84000276 \h 52. Historical Stock Analysis of Verizon Communications and AT&T Incorporation from 1st October 2020 to 30th September 2021 (Monthly Basis) PAGEREF _Toc84000277 \h 5a. Verizon Communications and AT&T Incorporation Stock Prices from 1st October 2020 to 30th September 2021 PAGEREF _Toc84000278 \h 5b. Charts for the Stocks Prices of Verizon Communications and AT&T Incorporation PAGEREF _Toc84000279 \h 6c. Analysis of the Historical Stock Prices Trend and Recommendation to Purchase the Stock PAGEREF _Toc84000280 \h 7References PAGEREF _Toc84000281 \h 8
Verizon Communications Incorporation Analysis
1. Verizon Communications Company Background
Verizon Communications (VC) is one of the largest communication technology companies that offer voice, data, and video services and solutions for mobility, security, control, and network connectivity (Verizon, 2021). The company's success is observable because it generates more than $128.3 billion in 2020 (Verizon, 2021) and has a current market capitalization of $223.6 billion (Yahoo Finance, 2021).
2. Market Ratios for the Verizon Company for the Last 1 to 3 Years and Competitor, AT&T Incorporation
The competitor company selected for the analysis is AT&T Incorporation – one of the leading telecommunication companies that deals in media and technology services (CNN, 2021). Market ratios of Verizon Communications are extracted from the online source of Morningstar (Morningstar, 2021). In the same way, ratios of AT&T are also extracted from an online source (Morningstar, 2021a).
a. Market Ratios Table
Table 1: Verizon Communications (VC) and AT&T Incorporation Market Ratios from 2018 to 2020
Verizon Communications (VC)
AT&T Incorporation
Ratios
2018
2019
2020
2018
2019
2020
1. Price/Earnings (P/E) Ratio
7.16x
15.78x
13.29x
5.43x
17.52x
19.05x
2. Price/Book (P/B) Ratio
4.26x
4.31x
3.74x
1.13x
1.55x
1.17x
3. Earnings Per Share
$3.76
$4.65
$4.30
$2.85
$1.89
-$0.75
4. Dividend Per Share
$2.37
$2.42
$2.47
$2.00
$2.04
$2.08
5. Earning Yield %
13.96%
6.34%
7.52%
18.43%
5.71%
5.25%
6. Price to Earnings to Growth (PEG) Ratio
2.07
4.42
3.75
1.73
4.61
4.91
b. Comparison of the Market Ratios of Verizon Communications and AT&T Incorporation
Market ratios reveal that the P/E ratio of VC fell to 13.29x in 2020 from 15.78x in 2019 – an indication that the market is willing to pay less for the VC stock's in comparison to the future or past earnings. However, AT&T's P/E ratio was continuously risen from 5.43x in 2018 to 19.05x in 2020. It shows that investors are willing to pay higher for AT&T stocks based on future earnings. P/B ratio shows that VC market value compared to book value has also fallen from 4.26x in 2018 to 3.74x in 2020. However, it is still higher than the P/B of 1.17x of AT&T in 2020.
Market ratios reflect that the VC company successfully meets the shareholders' expectations of the required returns compared to AT&T. Earning yield of VC is 7.52% in 2020 compared to 6.34% in 2019, and higher than the 5.71% 5.25% in 2019 and 2020, respectively. A clear indication that the investors are earning more by investing in VC in recent years. The dividend per share of VC was $2.42 in 2019 and $2.47 in 2020, higher than the $2.04 and $2.08 in the same period. Therefore, either VC has a policy of retaining less earned income and distributing more to shareholders, or VC is genuinely generating higher earnings to distribute more dividends to shareholders. Another indication is the EPS of VC that is $4.30 in 2020, higher than the -$0.75 of AT&T in the same period; therefore, investors will be...
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