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Verizon’s Scale and Value Proposition in the US Telecom Market

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Verizon’s scale

In this part of the series, we’ll look at some value-centric measures for Verizon (VZ) among the major companies in the US wireless space. Let’s start with the size of the top four US wireless carriers: Verizon, AT&T (T), T-Mobile (TMUS), and Sprint (S).

As of November 11, 2016, AT&T was the largest US telecom player, Verizon was the second largest, and T-Mobile was the third largest player by market capitalization. Also, Sprint’s market capitalization remained lower than T-Mobile’s.

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Verizon’s valuation multiples

Price-based multiples take into account value from a shareholder’s perspective. EV (enterprise value) based multiples help investors to understand the value of a company via its sources of capital from the shareholders’ point of view. These are forward multiples based on expected values after a year.

Let’s look at the earnings multiples for Verizon and its peers as of November 11, 2016. Verizon was trading at a forward PE (price-to-earnings) multiple of ~11.9x, which was lower than AT&T’s ~12.36x. Verizon’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) metric was ~6.41x, which was higher than Sprint and T-Mobile at ~5.16x and ~6.13x, respectively.

Verizon’s dividend yield was ~4.8% as of November 11, 2016. In comparison, AT&T had a dividend yield of ~5.2%. In the next article of this series, we’ll look at analysts’ recommendations for Verizon’s stock.

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