Investing in Verizon

Verizon Communications would be a good investment. This paper will discuss the industry conditions for Verizon. Second, it will discuss the position of Verizon within the telecommunications industry. Third, it will discuss the economic outlook for Verizon. Last, this paper will discuss whether Verizon Communications is a good investment based on industry conditions, its position within its industry, and given its economic outlook.

Verizon is within the telecommunications services industry. The New York Times, states the telecommunications services sector “consists of companies engaged in fixed-line and wireless telecommunication networks for voice, data and high-density data” (New York Times, n.d.) Verizon falls within this industry sector in that it provides telecommunication services. Analyzing Thomson Reuters data, the New York Times (n.d.) has provided an outlook of the telecommunications industry as a whole; there are 85 companies providing wireless telecommunications services and 110 providing integrated telecommunications services. Over the last year, there has been a +8.32% change in integrated telecommunications services (New York Times). The overall telecommunications industry conditions appear positive.

Within the telecommunications industry, Verizon holds a high position. MSN (Verizon Communications, n.d.) describes Verizon’s place within the telecommunications industry, as “a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies with a presence in over 150 countries around the world” (Verizon Communications). With its large global presence in 150 of 177 countries around the world, Verizon has ranked itself high on Forbes’ annual lists of companies. According to Forbes (Science, 2014), Verizon had sales of $115.85 billion and ranked it at number twenty-two on its list of “World’s Most Valuable Brands” and number one hundred thirty-four on its “Global 2000” list. The high value placed on the Verizon brand is a result of recent positive economic forecasts for the company.

Verizon has a positive economic outlook that will make it a good investment. According to Forbes (Science, 2014), “[Verizon] has seen revenue growth for the last three quarters. The 1% revenue increase brought the figure up to $30.28 billion in the most recent quarter. Looking back further, revenue increased 4% in the second quarter from the year earlier and 4% in the first quarter” (Science, 2014). The revenue growth is consistent for the last year. “Analysts are expecting the company to book a profit of 65 cents a share, up from 38 cents a year ago” (Science, 2014) The increase in shares overtime has put Verizon on sure ground with external analysts. “The majority of analysts (71%) rate Verizon as a buy. This compares favorably to the analyst ratings of eight similar companies, which average 24% buys” (Science, 2014). Given the projected growth and the value placed on the Verizon brand, Verizon has an overall positive economic outlook.

The only possible concern that potential investors may face is that Verizon was given an A- rating by Fitch Rates (2014) due to its unsecured debt. Despite the slightly lower rating, “Fitch expects VZ to materially reduce debt over the next few years. EBITDA growth, combined with debt reductions is expected to reduce leverage to approximately 2x by the end of 2016.” (Fitch Rates, 2014). Verizon has other strong market indicators, such as its position in the telecommunications industry and a positive economic forecast. With a commitment to a debt reduction plan, the rating will likely increase to a clearly positive prospect.

Verizon is within the telecommunications industry, which has seen positive changes over the last year. The company itself has a high value. Verizon has seen revenue growth over the last year and its shares have seen growth that is not too outrageous to be risky. Thus, Verizon would make a good investment.

References

Fitch Rates Verizon Communications' Proposed Debt Issue 'A-'; Outlook Stable. (2014, March 10). MarketWatch. Retrieved from http://www.marketwatch.com/story/fitch-rates-verizon-communications-proposed-debt-issue-a-outlook-stable-2014-03-10?reflink=MW_news_stmp

New York Times. (n.d.). U.S. Markets. - NYTimes.com. Retrieved from http://markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp

Science, N. (2014, January 20). Earnings Increase Expected for Verizon Communications. Forbes. Retrieved from http://www.forbes.com/sites/narrativescience/2014/01/20/earnings-increase-expected-for-verizon-communications/

Verizon Communications. (n.d.). VZ Company report, financial results, key ratios, income statement. Retrieved from http://investing.money.msn.com/investments/company-report?symbol=VZ