Verizon Communications (NYSE:VZ) is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Verizon Wireless has a huge competitive moat in the U.S. wireless business, investing billions of dollars in spectrum and its network, something that's nearly impossible for competitors to replicate.
Going By the Numbers
Revenues increased by 4.8% since the same quarter one year prior. Earnings per share have got a boost since there is a revenue growth of the company. The gross profit margin for this company is rather high; currently it is at 63.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.80% is above that of the industry average. The gross profit margin for VZ is rather high; currently it is at 63.69%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.80% is above that of the industry average.
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- VZ 15-Year Financial Data
- The intrinsic value of VZ
- Peter Lynch Chart of VZ
The company has demonstrated a pattern of positive earnings per share growth over the past two years. During this year increased its bottom line by earning $4.00 versus $0.31 in the prior year. Verizon's $130 billion deal to take over of all of Verizon Wireless is helping lift its profit. The largest US cellphone carrier completed its acquisition of the 45 per cent stake in its wireless division from British mobile phone carrier Vodafone Group PLC in February.
Verizon generates more than $20 billion in free cash flow annually. It distributed nearly $6 billion in dividends to shareholders last year, and has been upping its payout annually for years.
Verizon is taking all the right steps to strike more deals with its partners. The deal with Netflix (NASDAQ:NFLX) is a step in the right direction. Verizon is already renowned for its better speed and performance and the Netflix deal just confirms this belief.
Verizon is seeing robust growth in wireless contracts and residential broadband Internet. In eight of the last nine quarters, the wireless communications giant has posted double digit growth in net income. Also, because Verizon now has full ownership of Verizon Wireless after purchasing the remaining 45% stake from Vodafone (NASDAQ:VOD) it should be able to boost its sales going forward on the back of integration synergies.
Verizon is making consistent investments in its network and platforms to support its products and services. The telecom giant is looking to deliver high network quality and reliability to offer a rich customer experience.
FiOS is driving Verizon’s growth in Wireline segment
FiOS is the high-speed broadband connection based on a fiber optic network. Verizon recently introduced its FiOS Quantum service, which can provide Internet download speeds ranging from 50 Mbps to 500 Mbps. FiOS achieved a year-over-year revenue growth of 15.5% in Q1 2014, which was driven by customer additions and FiOS Quantum penetration.
4G adoption and new plans are helping wireless revenue growth at Verizon
Verizon continues to benefit from the faster adoption of high-speed 4G networks by customers, such that about 73% of the total data traffic of the Verizon network is carried through its 4G LTE network. Plus, 64% of the smartphones on the Verizon network were on 4G as of Q1 2014. Also, Verizon has come up with new plans to reduce its churn rate even further. It introduced the EDGE plan last year, which is an installment plan for customers who want to upgrade their devices faster or who don’t want to pay the upfront cost of their devices.
On May 21, 2014, Verizon announced that it is expanding its Healthcare Enabled Services to five additional data centers, and offering a broader range of cloud and data center infrastructure services. According to Verizon, the expansion will enable the healthcare industry to meet the federal Health Insurance Portability and Accountability Act requirements for safeguarding electronic protected health information (ePHI). The Company also said that healthcare organizations can now securely store their ePHI in the Company's data centres located in Richardson, Texas; Santa Clara, California; Englewood, Colorado; Carteret, New Jersey and Elmsford, New York.
Verizon is making solid investments in the business to upgrade its network and provide better services to customers. Verizon's fundamentals are strong, and the company can continue increasing its dividend in the future.
Since Verizon is generating a huge amount of cash flow and is also adding a good number of subscribers for its services, it should be able to increase its dividend going forward.
VZ is the biggest telecom company in the U.S. in terms of its market cap, which currently stands at above $200 billion. Verizon has maintained healthy revenues and revenue growth for the last decade.