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Verizon Is Noticeably Undervalued, Buy Before Earnings

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  • Verizon is currently undervalued in two models and and is primed for a long position, because of undervaluation and sector growth.
  • The company's equilibrium is increasing, suggesting real, bubble free, growth.
  • Verizon is leading all competitors in total cell phone service subscribers.

By Eric Mason

As telecommunication companies diversify, the modeling approaches must diversify with them. Two independent and mutually exclusive models show Verizon (NYSE: NYSE:VZ) is undervalued. By using a dual model approach an investor gains a vantage point from two major sectors in which Verizon operates: cellular service and general tele-broadcasting services.

The first model used is a multivariate regression using the share values of T-Mobile US, Inc (NasdaqGS: TMUS), AT&T Inc. (NYSE: T), Sprint Corporation (NYSE: S), and United States Cellular Corporation (NYSE: USM) against the share value of Verizon. This model yields a statistically significant model with a Significance F value of effectively 0, meaning the model has a virtually 0% chance of just being the product of chance. The model processes 6,290 data points in to 1,258 observations, over the course of five years. Results are indexed.

Verizon is the largest cellular provider in the United States, with T-Mobile, AT&T, Sprint, and U.S. Cellular making up the remaining firms in the top 5, in terms of subscribers.

In regards to this model, the behavior of the data series suggests that this is a lower bound. In other words, the modeled price should be consistently below the observed price; when the observed price begins to approach the modeled price this is an indication of undervaluation. Verizon has been steadily marching towards its modeled price. This march, when combined with the previous postulate, should signal to an investor that Verizon is a stock to watch.

While the graphic representation of Verizon, above, shows that Verizon has been underperforming relative to the other cell phone providers, but when compared to its current share price it is appropriately priced, leaning towards undervalued. As the next model will elaborate further, there are two sides to gauging Verizon current share valuation.

Verizon is

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WappCap is a stock analysis and research company headed by James LePage (Co-Founder of ShareClub), alongside a team of financial professionals. We write about undervalued, unknown stocks with high return potential. Our articles are meticulously crafted to help you make the decision to invest (or not) in a security, utilizing original analysis, valuation models, and industry experience. Check out our TipRanks analyst rating - we're currently near the top 100 analysts out of over 6,000, and have a return rate of over 30% in 1 year!

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