Verizon & iPhone: One Of Many Boosts

Verizon (VZ) is an appealing asset for near term growth and potential capital appreciation alongside an adequate annualized dividend. Verizon has significant advantages over its peers due to its extensive LTE network. Verizon’s advancements with 4G make it the most likely to benefit from the iPhone 5 launch and other devices that will utilize LTE as well. Verizon is also the forefront provider to effectively anticipate and best position it to adapt to a developing era in which data becomes the major utility for voice, Internet and device communications.

AT&T (T) is Verizon’s most direct competitor; Sprint (S) is the largest wireless carrier behind Verizon, while CenturyLink (CTL) is the other major US telecom with wireline and global enterprise aspirations. Verizon’s $129 billion market cap is smaller than AT&T’s $220 billion, Verizon has a higher stock price than both wireless carriers but it has the most potential for an uptick and growth from the approaching prominence of 4G devices. Verizon’s price is around 45 times earnings while both CenturyLink and AT&T are around 50 times earnings. Verizon’s 1.12 price-to-sales ratio is also lower than AT&T’s 1.7 and CenturyLink’s 1.43.

Verizon’s 7.5% return on equity, 12.71% operating margin and 10.1% net margin are all higher than the other major telecoms by at least 350 bps, 80 bps and 650 bps, respectively while all of Sprint’s margins are running at a substantial deficit. Sprint’s beta score is above one while Verizon has the lowest beta score among the major telecoms below one. Verizon’s annualized dividend is around $2.00, CenturyLink’s is around $2.90 and AT&T’s is around $1.76. To continue reading, click here.