VZ Stock Report

2-Year Price History

Ockham’s Rating

VZ Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company’s stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, VZ the high and low end of the Price to Sales per share ratios are 1.56x and 1.07x respectively.

Notice that VZ’s current Price to Sales per share ratio is 0.82x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $29.26, VZ is 38% below where we would expect to see it. This will beneficially factor into our final analysis of VZ as it is not often that this stock sinks to these levels.

VZ Cash Earnings

Looking at VZ specifically in their Cash Earnings capabilities, Ockham views VZ as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for VZ, the current level of Cash Earnings compared to its historical levels helps identify where VZ is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 6.38 and a historical low Cash Earnings per share ratio of 4.38, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for VZ? From the Ockham perspective, we are looking specifically at VZ to see if the market is recognizing the huge disparity between VZ’s past stock price to Cash Earnings ratio to today’s levels. At a difference of 25% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at VZ. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

VZ Dividends

When determining a company’s future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn’t imperative for VZ to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for VZ is $1.84 producing a current dividend yield of 6.29%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from VZ against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from VZ over previous years was 7.98% while the lowest dividend yield was 2.40%. VZ’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 21.19% above the median which weighs very positively on our analysis of VZ.