Verizon: Cheaper Than AT&T After Weak Q3, Potentially Unfairly

Nov. 29, 2022 3:17 PM ETVerizon Communications Inc. (VZ)T12 Comments
Librarian Capital profile picture
Librarian Capital
7.84K Followers

Summary

  • Verizon shares are near their 5-year low, having lost 12.5% since our downgrade in July, underperforming AT&T shares by 18 ppt.
  • Verizon's EBITDA had grown less than AT&T's in recent quarters, but partly because the latter had fallen more in 2021.
  • AT&T's faster EBITDA growth has largely been driven by its wireless business, which we believe is benefiting from past promotions.
  • Verizon is now following with its promotions and cost cuts, and the risk of a mutually-destructive price war is real.
  • Verizon is now cheaper than AT&T, with a similar 7.4x P/E and a higher 6.8% Dividend Yield. However, we would avoid both stocks.
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Introduction

We review our Hold rating on Verizon Communications Inc. (NYSE:VZ) after shares remain near their 5-year low in October (just after Q3 results on October 21), and 37% below the level at the start of 2020:

Verizon Share Price (Last

This article was written by

Librarian Capital profile picture
7.84K Followers
Global, long-term, fundamentally-oriented & concentrated investing. With more than 10 years' buy-side experience, I look at stocks globally and across industries, with a focus on the U.S. and U.K.. My investing style can best be described as "Quality Growth" or "Growth At a Reasonable Price". (previously writing under the name "Blue Sky Capital" until December 2019)

Disclosure: I/we have a beneficial long position in the shares of CHTR,CMCSA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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