2024-01-29 22:45:57 ET
Summary
- Verizon's 4Q23 results exceeded consensus expectations with 449,000 postpaid phone net adds, driven by the myPlan and a more decentralized operational approach.
- Verizon has regained share in postpaid phone net adds among the big three carriers, while T-Mobile is gaining traction in some smaller markets traditionally dominated by Verizon and AT&T.
- FWA growth remains robust. Decelerating mobile user growth, improved spectral efficiency, and less penetrated suburban and rural areas will allow operators to go beyond their 2025 targets, in our view.
- We believe that Verizon will have ample room for dividends and deleveraging. We anticipate discussions about share buybacks to emerge in two years.
- The stock is trading at 9x forward P/E, with 10.5% FCF yield and 6% dividend yield. Current multiples are below the 5-year average.
Recap
In our last article on Verizon ( VZ ), we highlighted the impact of losing Consumer postpaid phone subscribers on the stock price. But, we also pointed out signs of promising improvement. Additionally, our view is that the recently-cleared C-band spectrum "will help strengthen its competitive position in the FWA space." Lastly, we believe that Verizon should have ample room for deleveraging, and we can anticipate discussions about share buybacks to emerge in two years....
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For further details see:
Verizon Q4 2023 Earnings: Robust Net Adds, Room For Deleveraging, 10.5% FCF Yield