VZ - Verizon: You Haven't Seen Anything Yet
2024-06-17 00:38:29 ET
Summary
- Verizon stock has outperformed the S&P 500 for the past year, with a 23.1% total return. But I believe we haven't seen anything yet.
- Stable operating metrics, decreasing debt, and potential for margin expansion make VZ a compelling investment opportunity, in my view.
- My updated DCF model suggests the Company is undervalued by 46.25%, excluding the attractive dividend yield, which significantly adds value to the stock.
- I believe Verizon offers a compelling medium-term investment opportunity.
Intro & Thesis
I initiated coverage of Verizon Communications Inc. ( VZ ) stock back in mid-July 2023 , that's almost a year ago. Since then, VZ's total return has amounted to 23.1% compared to the S&P's ( SP500 ) ( SPX ) return of around 20.5%. Throughout the year, I have confirmed my rating twice. However, after the last update in March 2024 , the stock started lagging behind the broader market. This underperformance can be explained by the surge in tech companies like Nvidia ( NVDA ) and others from the "MAG 7" (this particular sector accounts for >33.5% of the whole SPY holdings structure ), which helped the S&P 500 index to keep reaching new highs in 2024. Value stocks have been lagging significantly for the past few months, hence the difference....
Verizon: You Haven't Seen Anything Yet