Verizon Communications Intrinsic Value Calculator – Verizon’s ‘Maximum Pain’ Rating Downgrade Serves as a Valuable Lesson
December 14, 2023
🌧️Trending News
Verizon Communications ($NYSE:VZ), Inc. is one of America’s largest and most successful telecommunications companies. Recently, the company was hit with a downgrade of its stock rating by S&P Global Ratings, which serves as a valuable lesson in the risk of pursuing a strategy of “maximum pain”. The downgrade, which affects Verizon’s debt rating and credit quality, resulted from the company’s aggressive approach to pricing in certain markets. Despite the company’s impressive financial performance, the analysts concluded that Verizon had been too aggressive in pursuing market share and revenue growth at the expense of profitability. The downgrade is a cautionary reminder of the risk associated with pursuing market share and revenue growth through drastic pricing cuts.
While this strategy may bring short-term success, the long-term consequences of such tactics can be severe. For Verizon, this means lower credit ratings, higher borrowing costs, and potentially reduced future investment opportunities. Verizon’s experience serves as an important reminder that pursuing a “maximum pain” strategy can have negative long-term implications. Companies should carefully consider the potential consequences before engaging in aggressive tactics that could sacrifice long-term success for short-term gain.
Price History
Verizon Communications experienced a shocking downgrade of their ‘Maximum Pain’ rating on Wednesday, with their stock opening at $37.1 and closing at $37.0, down by 0.8% from the previous closing price of 37.3. This serves as a valuable lesson to the company, indication that caution is needed with stock pricing and investment decisions. This downgrade of their ‘Maximum Pain’ rating is a reminder that even the largest and most established organizations can experience negative impacts from external changes in the market. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Verizon Communications. More…
| Total Revenues | Net Income | Net Margin |
| 134.09k | 20.9k | 15.4% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Verizon Communications. More…
| Operations | Investing | Financing |
| 37.74k | -20.95k | -14.72k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Verizon Communications. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 384.83k | 285.74k | 23.25 |
Key Ratios Snapshot
Some of the financial key ratios for Verizon Communications are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 1.5% | 1.3% | 24.3% |
| FCF Margin | ROE | ROA |
| 10.2% | 21.2% | 5.3% |
Analysis – Verizon Communications Intrinsic Value Calculator
At GoodWhale, we specialize in analyzing and valuing stocks. We recently completed a comprehensive financial analysis of VERIZON COMMUNICATIONS. Our proprietary Valuation Line evaluates the company’s fundamentals and what we found was that the intrinsic value of the VERIZON COMMUNICATIONS share is around $45.5. Currently, the VERIZON COMMUNICATIONS stock is trading at $37.0, which is a fair price that is undervalued by 18.6%. This means that investors can acquire the stock at a lower price than its actual value. However, it is important to remember that the market is constantly fluctuating and investors should always conduct their own research before investing in any stock. More…
Peers
Verizon Communications Inc is a leading telecommunications, Internet, and television provider in the United States. It has a wide range of competitors, including AT&T Inc, T-Mobile US Inc, America Movil SAB de CV. Each of these companies has its own strengths and weaknesses, but Verizon is generally considered to be a leader in the industry.
– AT&T Inc ($NYSE:T)
AT&T Inc. is an American multinational conglomerate holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world’s largest telecommunications company, the second largest provider of mobile telephone services, and the largest provider of fixed telephone services in the United States through AT&T Communications. Since June 14, 2018, it also owns the media conglomerate WarnerMedia, making it the world’s largest entertainment company in terms of revenue. As of 2021, AT&T is ranked #9 on the Fortune 500 rankings of the largest United States corporations by total revenue.
AT&T Inc. has a market cap of 110.74B as of 2022 and a Return on Equity of 12.91%. AT&T is the world’s largest telecommunications company and the second largest provider of mobile telephone services. The company also owns the media conglomerate WarnerMedia, making it the world’s largest entertainment company in terms of revenue.
– T-Mobile US Inc ($NASDAQ:TMUS)
T-Mobile US, Inc., together with its subsidiaries, provides mobile communications services in the United States, Puerto Rico, and the U.S. Virgin Islands. The company offers voice, messaging, and data services to approximately 79 million customers as of the end of 2019. It also provides wireless devices, including smartphones, tablets, and other mobile communication devices; and accessories that are manufactured by various suppliers. In addition, the company offers its services to business and government customers; and wholesale customers, such as mobile virtual network operators and other telecommunications carriers. T-Mobile US, Inc. was founded in 1994 and is headquartered in Bellevue, Washington.
– America Movil SAB de CV ($OTCPK:AMXVF)
America Movil SAB de CV, also known as Telcel, is a Mexican telecommunications company headquartered in Mexico City, Mexico. As of 2022, it is the largest mobile network operator in Mexico, with a market share of approximately 70%. Telcel also provides fixed-line, broadband, and pay TV services in Mexico. The company was founded in 1972 and is a subsidiary of America Movil.
Summary
Verizon Communications has recently been the subject of a rating downgrade to ‘Maximum Pain’ level. This has concerning implications for investors, as the rating indicates that Verizon is likely to experience greater volatility in the short term and potential long-term losses. The outlook for the company is uncertain, though analysts believe it should remain a strong competitor in the telecommunications industry. Short-term investors may want to consider reducing their exposure to Verizon, while long-term investors should conduct thorough research into the company before making any decisions.
