uploads/2015/11/part79.png

How Fundamentally Strong is Verizon after 3Q15?

By

Updated

Current and quick ratio

AT&T (T) has a current ratio of 0.73x, which is lower than the industry median of 1.1x. Its quick ratio is also 0.73x, also lower than the industry median of 1.0x. In comparison, Verizon (VZ) has a current ratio of 0.63x and a quick ratio of 0.56x, whereas T-Mobile (TMUS) has a current ratio of 1.4x and a quick ratio of 1.3x, which is higher than the industry median. Current and quick ratios measure a company’s ability to pay short-term obligations.

Article continues below advertisement

Price to earnings, book value, and sales

AT&T’s trailing-12-month price-to-earnings (PE), price-to-sales (PS), and price-to-book value (PBV) ratios are 38.1x, 1.3x, and 1.7x, respectively. The PE, PS, and PBV ratios for Verizon are 17.9x, 1.4x, and 13.9x, respectively, whereas for T-Mobile, they stand at 61.3x, 0.95x, and 1.9x, respectively. The industry medians for PE, PS, and PBV are 19.2x, 1.5x, and 2.3x, respectively.

As seen in the above chart, the forward PE ratios for AT&T, Verizon, and T-Mobile stand at 20.8x, 11.7x, and 16.1x, respectively, compared with the industry forward PE median of 17.8x.

Dividends and buyback

AT&T has a dividend yield of 5.6% and a dividend payout ratio of 2.0x. It has a share buyback rate of 4.3. Verizon has a dividend yield of 4.9% and a dividend payout ratio of 0.89x. It has a share buyback rate of -11.9. In comparison, the industry medians for dividend yield, dividend payout, and share buyback rate stand at 3.8%, 0.70x, and -1, respectively.

AT&T comprises 26.0% of the Vanguard Telecommunication Services ETF (VOX) and 14.3% of the iShares S&P Global Telecommunications ETF (IXP).

Advertisement

More From Market Realist