Long-established in the Telecommunication Services industry, Verizon Communications Inc (VZ, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 4.4%, juxtaposed with a three-month change of -14.99%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Verizon Communications Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 10/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned Verizon Communications Inc the GF Score of 69 out of 100, which signals poor future outperformance potential.
Verizon Communications Inc: A Snapshot
Verizon Communications Inc, with a market cap of $127.89 billion, primarily operates in the wireless business, providing about 70% of service revenue and nearly all operating income. It serves about 92 million postpaid and 22 million prepaid phone customers via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks in the Northeast, which reach about 25 million homes and businesses and serve about 8 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, often using a mixture of its own and other carriers' networks.
Financial Strength Analysis
Verizon Communications Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 1.19, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.03 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where Verizon Communications Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Verizon Communications Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Verizon Communications Inc has a strong reputation in the telecommunications industry, its current financial and growth indicators suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
