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Verizon’s Valuation Metrics in the Global Telecom Market

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Verizon’s size in the telecom market

In the earlier parts of the series, we looked at some updates from Verizon (VZ) at the Jefferies Media & Communications Conference on February 24, 2016. David Small, executive vice president of wireless operations at Verizon, participated in that conference. Now let’s look at the value proposition of Verizon among select global telecom titans.

As of February 25, 2016, Verizon is the third-largest global telecom player by market capitalization. It follows China Mobile (CHL) in this metric. The largest global telecom player by market capitalization was AT&T (T) as of the same date.

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Dividend yield for Verizon and select global peers

Let’s look next at Verizon’s dividend yield. We’ll also look at dividend yield for some select global telecom players. Verizon’s forward dividend yield was ~4.5% as of February 25, 2016. It was lower than AT&T’s at ~5.2%.

Among the global peers, dividend yields for Telefonica (TEF), Orange (ORAN), Deutsche Telekom (DTEGY), and America Movil (AMX) were ~7.9%, ~3.9%, ~3.9%, and ~2.3%, respectively, as of February 25, 2016.

Earnings multiples of Verizon and select global peers

Now let’s look at Verizon’s earnings multiples as well as earnings multiples for some select global telecom players. Verizon was trading at a current year PE (price-to-earnings) multiple of ~12.8x on February 25, 2016. This metric was lower than the comparable PE multiple for AT&T at ~13.2x.

In the global telecom market, the same metric for Deutsche Telekom, Telefonica, Orange, and America Movil were ~18.9x, ~21.4x, ~14.9x, and ~11x, respectively, as of February 25, 2016.

For a diversified exposure to Verizon, you may consider investing in the SPDR Dow Jones Industrial Average ETF (DIA). The telecom company made up ~1.8% of the ETF at the end of December 2015.

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