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Verizon Holds Plenty of Investment Appeal

Value Line’s Market Focus newsletter once again directs investors’ attention to Verizon Communications (NYSE: VZ). The New York-headquartered telecom behemoth employs about 118,400 individuals and has a market capitalization of around $216 billion.

It has been a member of the Dow Jones Industrial Average since April 2004. Verizon made modest gains during the March quarter. Earnings came in at $1.35 a share, in line with our estimates, and 3% higher than the year-ago period, while revenues climbed 2%.

Consumer revenue for the quarter grew 10.9% year over year, driven by the first full quarter of TracFone integration, higher equipment revenue, and strong core wireless service revenue growth. Conversely, Verizon Business revenues dropped 0.9%, as ongoing legacy wireline declines continue to offset Wireless revenue growth. And management has tempered its outlook for the balance of 2022, given the expenses of the ongoing launch of C-Band and the expansion of its 5G Ultra Wideband network.

The company is in sound financial shape. Verizon ended the March quarter with $1.66 billion in cash on its ledger (down from $10.2 billion a year ago), and long-term debt of $140.0 billion (down from $149.7 billion this time last year). And going forward, we would not be surprised to see the company boost its dividend payout and make additional acquisitions, notes analyst Kenneth A. Nugent.

Value Line thinks that the stock holds plenty of investment appeal. At the recent quotation, shares of VZ offer substantial capital appreciation potential to 2025-2027. The issue has a lot to offer conservative accounts (Safety: 1, Highest), and the company retains the highest grade for Financial Strength (A++). Moreover, income-seeking investors may be drawn to the high-quality equity’s secure payout and high dividend yield (5.1%), which is more than double that of the Value Line median. The 3 to 5-Year Target Price for Verizon: $90.00 - $115.00.

Editor’s Note: Value Line’s Market Focus newsletter provides unbiased insights on investments, the markets and the global economy. Value Line offers a broad array of investment research services. For details visit www.valueline.com.

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