Recent performance snapshot for Verizon Communications (VZ)
Verizon Communications (VZ) has drawn investor attention after a mixed stretch in its share price, with the stock up over the past month but down over the past 3 months and week.
See our latest analysis for Verizon Communications.
With the share price at $47.81, Verizon shows a 30 day share price return of 2.57%, while year to date share price gains of 17.99% and a 3 year total shareholder return of 69.21% point to momentum that has been built over time rather than in the very short term.
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With Verizon trading at $47.81 and showing an intrinsic value estimate that is meaningfully higher, the key question for you is simple: Is this a genuine value opportunity, or has the market already priced in future growth?
Most Popular Narrative: 27.2% Overvalued
Compared with Verizon's last close at $47.81, the most followed narrative pegs fair value at $37.59, so the share price currently sits above that view.
I was looking for a large-cap company for diversification in my portfolio that has the strength to grow in the coming years. Furthermore, the debt-to-equity ratio must remain responsible or under control. The PEG (around or >1) and EPS (>1) ratios must be good, as well as the payout ratio (<75%), and the company must pay dividends, which I would prefer to see grow somewhat annually.
The narrative from Silvester focuses on steady dividend income, controlled leverage, and earnings power. It also raises the question of which growth and margin assumptions are used to arrive at that $37.59 fair value.
Result: Fair Value of $37.59 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, there are still clear risks to watch, including any pressure on profit margins and shifts in wireless demand that could challenge the case for overvaluation.
Find out about the key risks to this Verizon Communications narrative.
Another angle on Verizon's value
Silvester's narrative sees Verizon as 27.2% overvalued at a fair value of $37.59, but our DCF model points the other way. On those assumptions, Verizon at $47.81 trades around 61.3% below an estimated future cash flow value of $123.53, which raises a very different question about upside versus risk.
Before leaning on any one approach, it is worth understanding how the SWS DCF model turns long term cash flow assumptions into that $123.53 figure, and where those inputs could be too optimistic or too cautious. Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Verizon Communications for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mix of potential upside and concern feels finely balanced, do not wait around for a consensus to form. Review the data, stress test your own assumptions, and then weigh up the stock's 3 key rewards and 1 important warning sign.
Looking for more investment ideas?
If Verizon is on your radar, do not stop there. Broaden your watchlist now so you are not relying on a single stock story.
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- Build a steadier income stream by hunting for companies in the 62 resilient stocks with low risk scores that score well on both stability and risk controls.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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