Verizon (NYSE:VZ) is the nearest competitor to AT&T (NYSE:T). It is also a Dow 30 component company. Investor focus is on the relatively new wireless operation. The venture with Vodafone Group Plc (NASDAQ:VOD) is working better than expected.
The first-quarter earnings and revenue were only slightly ahead of Wall Street expectations. Wireless continues to grow, but at a reduced pace. Reading the news and looking at future projections, there may be warning signals being sent by VZ and its peers. Those signals are suggesting that the industry growth is slowing. On the bright side, profit margins grew to over 46 percent from 42 percent in the fourth quarter. On balance, the company financial statements continue to remain strong.
There seems to be an early industry trend of revenue and earnings growth dropping off. Longer-term projections confirm this negative trend may continue, for a year or more.
Verizon has recently been a bit questionable fundamentally, but the price per share has continued to be very positive. This is why valuations almost always foretell the direction of a company's price per share. It is this message that I try to make clear to you, in each of my postings. VZ pays its shareholder a 4.83% annual dividend. The company valuations appear to be on the decline. We will have to wait and see what the technicals will do.
The price per share is in a wonderful up trend for nearly a full year. Verizon is currently selling for $41. Trends in price are what make the difference between winners and losers, and VZ has a current trend that is doing that job very well.
Current Valuation for Verizon Mobil
Comments: These are not overly strong Valuations and Target Price Projections. The Valuation Divergence is negative. When I do further fundamental studies, the result neither improves nor declines. Projected earnings growth for VZ indicates that it will be declining through 2015. My technicals are currently graded as, "very good" as are my consensus opinions.
This suggests that VZ will continue to follow the general market indices. (see the below 20-year chart).
Security's valuations should be updated and studied as frequently as possible. This work may or may not offer positive support or perhaps a negative warning! I do not recommend buying VZ due my forecast of a bearish technical cycle.
Plus 10+% / minus 14+% from the current price.
Forward P/E (fye 12/ date):
4.8 - (very high)
Price to Sales:
1.1 - (NYSE:LOW)
Price to Book:
Return on Investment (R.O.I.)
7.4 % (NASDAQ:GOOD)
(minus) - 18+% from current the price.
Source of raw data: Finviz.
Projected Price is calculated and produces a probable range of the current price over the coming one to three months. Fundamental Valuation and Technical Opinion is calculated and translated into a Rating. See the below Report Card. I often suggest cash and patience as an alternative.
Fundamental - weighting (40%)
Technical - weighting (35%)
Consensus Opinion - weighting (25%)
Report Card -Grade: ( 0 - 100 / A - F ) - (ascending / status quo / descending)
88 / B -- descending
88 / B -- descending
82 / B- -- descending
83 / B -- descending
My weighted Fundamental, Technical and Consensus Opinion ratings range from Excellent to Very Poor. Grades below 90 / A are not current (never are) candidates for buying. Grades above 60 / F are not current (never are) candidates for short selling. Information and data are ever changing, so be alert. Every company's "Grade" can be from a neutral grade (60 to 90 / D to B) to a buy (greater than 90) or short sale (less than 60) in a very short time.
Further support for the above notes can be read in my Instablog article on "My Rotation Model."
The telecomm services - domestic industry is and has been very strong since early 2009. This fact is applicable, both fundamentally and on the charts. Verizon is technically in sync with its fundamentals and is in stride with its industry. Under normal circumstances this would be a positive remark. However, in the case of VZ, looking at the above tables and the chart below tells us a mixed message. That is not unusual and only time will provide clarity as to that old question. The question that is yet unanswered is, do you buy, sell or hold?
My criterion for taking a bullish position is that the company must have the prospect within its fundamental valuation and technical chart to outperform the general market, its sector, and industry group.
The general market is currently fundamentally overvalued and technically overbought, and its consensus opinion is much too bullish. It is showing signs of serious deterioration, especially in the area of breadth. This means that you must consider holding cash or perhaps take bearish positions in the coming weeks.
My analytic focus is investing wisely, e.g. taking advantage of the bull / bear cycles as they occur within the overall marketplace. Integrating conservative fundamental analytics within these technical cycles means maintaining a process of the thorough and ongoing analytics of many companies, sectors and industry groups.
I suggest that you take a long look at this 20-year chart. Having a longer-term perspective of a possible future investment will always give you a more consistent bottom line. Comparing the SPDR, S&P 500 ETF (NYSEARCA:SPY) tells a very compelling story about VZ.
Further support for my guidance for the general market can be read in my Instablog article on "Wednesday - General Market Update & Commentary."
(Click to enlarge)
Despite Verizon being the stronger company, I expect both VZ and its peers to be under moderate pressure in the coming weeks and perhaps longer. For a resumption of an up-trend, we just may have to wait a while. VZ is definitely a company on my future buy list. The comparison of these three companies should make a strong statement of why I stress doing your homework well.
I recommend taking a few minutes to study my 20-year chart. When buying or selling, taking a longer-term view of a security's price history is very important.
This is an initial warning about buying or holding Verizon.
I am bearish on both the economy and the general market. My more recent Instablog postings are focused on securities that should not be currently held in your portfolio. It is important for you to understand that holding cash during questionable time frames is a wise choice. (This is definitely a "questionable" time frame). This coming Saturday, I plan to add Verizon to my weekly Instablog update posting; you may want to check it out.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.