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A Look at Verizon’s Valuations

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Price movements for Verizon

On February 22, 2018, Verizon’s (VZ) stock price closed at $47.87. The telecom company’s stock price fell ~3.6% in the trailing year. 

In comparison, Sprint (S) and AT&T (T) have seen their stock prices decrease ~43.7% and ~12.3%, respectively, in the trailing year. T-Mobile’s (TMUS) stock price fell ~6.9% in the trailing year.

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Verizon’s forward PE valuation

Taking into consideration the relatively stable and visible nature of Verizon’s earnings, the two most important valuation multiples utilized are forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] and forward price-to-earnings (or PE) multiples. 

On February 22, 2018, Verizon was trading at a forward PE multiple of ~10.3x, which was lower than AT&T’s forward PE multiple of ~10.6x. T-Mobile had a forward PE multiple of ~14.2x.

Verizon’s forward EV-to-EBITDA valuation

On February 22, 2018, Verizon’s forward EV-to-EBITDA multiple was ~6.5x, which was higher than Sprint’s forward EV-to-EBITDA multiple of ~4.5x. AT&T and T-Mobile had forward EV-to-EBITDA multiples of ~6.4x and ~6.3x, respectively.

Analysts’ recommendations

On February 22, 2018, 32 analysts actively tracked Verizon stock. It’s important to note that 75.0% of the analysts recommended a “hold,” while 25.0% recommended a “buy.” There were no “sell” recommendations for the stock.

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