SOLUTION: Ashford University Financial Analysis for Verizon Company Discussion

AT&TCompany
AT&T is a telecommunications service provider and its list on the NYSE. Thus, AT&T is
a monopoly among other phone service providers companies. The carrier of AT&T’s presence on
December 4, 2020, on Valueline, the third-quarter share net of $0.76 fell short as below the gross
margin of our $0.83 call due to the COVID-19 Pandemic. Not only that but also, the media
operation, the newest movies have delay for Directv Satellites service, which lose the customers.
On the part of the US’ sides, the telecommunications service had stopped providing the customer
at specific areas, such as Puerto Rico and the U.S Virgin Islands, to Liberty Latin America that
loses a lot of revenue and net profits. However, (revenues clocked in at $42.3 billion), from the
core wireless business that provides new 5G technology and the HBO MAX to continue the goods
and services for consumers. HBO MAX exceeded 38 million in the third quarter that competed
with Netflix and DisneyPlus. The revenue for the quarters between 2020 through 2021 are:
2020
2021
Q1: 42,779
Q1: 43,000
Q2: 40,950
Q2: 43,250
Q3: 42,340
Q3: 43,500
Q4: 44,931
Q4: 46,250
$171,000
$176,000
AT&T stated, “The valuation of the business should be completed by January, and the deal
should be closed during the second quarter of 2021,” estimated 70% of a segment account. As
for 2021, it is expecting to cover at least 176,000 or above. Most likely, it will happen because
the new vaccine of Johnson and Johnson will impact AT&T to recover some of its share nets and
call at the end of 2021. The Earning Share is probable:



$3.20 shares at current is an appreciation potential
$3.35 share for next year
$4.65 share for 2023-2025 as long-term
The dividends yield payout is over 7%, which is constant safe ground. Every year, the dividends
paid increase by 4. For instance, 2020 of dividends was 2.08 to 2.12 in 2021 on Valuation. As
long as the dividends are paid, the stock total return is an appreciation of the number of shares
based on its price each year. Last year in October, the common stock share was $7,126 million,
and currently, it is $7,131,763,496 of the common stock share. For 2020 & 2021 are expected to
estimate its ValueLine at 7125.0 of common shares outstanding. “Shares of AT&T Inc. T,
0.40% rallied 1.77% to $28.72 Wednesday, on what proved to be an all-around grim trading
session for the stock market” This statement of the MarketWatch and Wall Street Journal is
better than the other three lists, DJIA, S&P 500, and Verizon Communications, because they are
negative as -1.55%, -1.78%, and -1.25%. Verizon Telecommunications Service has serious
consequences for the stock market because there is a huge impact of Covid-19 and oil price in
the US. Overall, AT&T is output performance for competitors. The market capitalization price
was $205 billion; however, the NetAdvantage shows the market capitalization is $204,824.25.
That explains its market capitalization is lower than actual due to the new variant of COVID.
The credit bonding is still in the past of 2018, BBB, which hasn’t updated yet. The most
interesting thing to look at is the credit bond history is used to be A at the starter in 1987 and
then fell to BBB. Having a new 5G technology and HBO MAX might increase the credit bond
to A. We will keep an eye on it, ensure the AT&T have changed or not at the future plan. The
long-term for AT&T is to seek what could change and improve for the next 10 years. In fact,
AT&T Inc.’s price actual could be between $55-65 in the year 2024.
VERIZON NYSE-VZ
TIMELINESS
SAFETY
TECHNICAL
3
1
3
RECENT
PRICE
High:
Low:
Lowered 12/4/20
40.3
32.3
48.8
36.8
54.3
41.5
53.7
45.1
50.9
38.1
56.9
43.8
54.8
42.8
61.6
46.1
62.2
52.3
61.9
48.8
59.5
53.8
Lowered 3/5/21
18-Month Target Price Range
VALUE
LINE
Target Price Range
2024 2025 2026
LEGENDS
1.35 x Dividends p sh
divided by Interest Rate
. . . . Relative Price Strength
Options: Yes
Shaded area indicates recession
Raised 9/28/07
BETA .65 (1.00 = Market)
Low-High
$51-$77
36.0
26.0
11.3 RELATIVE
DIV’D
Median: 13.0) P/E RATIO 0.51 YLD 4.6%
55.36 P/ERATIO 10.9(Trailing:
160
120
100
80
60
50
40
30
Midpoint (% to Mid)
$64 (15%)
2024-26 PROJECTIONS
Ann’l Total
Price
Gain
Return
High 110 (+100%) 22%
Low
90 (+65%) 16%
Institutional Decisions
2Q2020
3Q2020
4Q2020
1381
1289
1532
to Buy
to Sell
1041
1122
1044
Hld’s(000)269842226467222715000
% TOT. RETURN 2/21
Percent
shares
traded
24
16
8
1 yr.
3 yr.
5 yr.
2005 2006D 2007 2008 2009 2010 2011 2012 2013
2014 2015 2016 2017 2018 2019 2020 2021 2022
25.59 30.29 32.56
7.24
7.07
7.40
2.56
2.54
2.34
1.62
1.62
1.65
5.24
5.88
6.11
13.56 16.68 17.62
2926.8 2909.9 2871.0
13.2
13.4
17.6
.70
.72
.93
4.8% 4.8%
4.0%
30.58 32.31 30.90 30.89 31.67
7.19 7.94
7.79
7.91
8.88
3.35 3.99
3.87
3.74
4.71
2.16 2.23
2.29
2.29
2.37
4.14 4.36
4.18
4.23
4.03
2.96 4.03
5.53 10.95 12.86
4155.4 4073.2 4076.7 4079.5 4132.0
14.5 11.8
13.3
12.9
11.1
.76
.59
.70
.65
.60
4.4% 4.7%
4.5%
4.7%
4.5%
34.27 38.02 37.68 39.10 40.53 29.11
7.65
8.12
8.01
7.96
7.85
6.79
2.54
2.40
2.21
2.15
2.32
4.00
1.78
1.87
1.93
1.96
2.02
2.08
6.07
6.01
5.82
5.73
5.66
4.01
14.68 14.67 13.64 12.69 11.60
9.38
2840.6 2835.7 2828.1 2835.5 2858.3 4141.1
13.7
12.7
13.8
17.1
18.1
12.2
.82
.85
.88
1.07
1.15
.69
5.1% 6.1%
6.3%
5.3%
4.8%
4.3%
110875 115846 120550
6086.8 5970.4 11497
2.7%
– – 19.6%
5.5%
5.2%
9.5%
36.9% 35.8% 48.4%
26.4% 24.9% 21.0%
136211 133151 185074
88434 88642 88956
7.2%
7.5%
9.0%
Pfd Stock None
16.9% 18.0% 29.6%
Common Stock 4,138,148,588 shs.
16.9% 18.0% 29.6%
MARKET CAP: $229 billion (Large Cap)
1.5%
2.2% 14.3%
CURRENT POSITION 2018
2019 12/31/20
91%
88%
52%
CAPITAL STRUCTURE as of 12/31/20
Total Debt $119062 mill. Due in 5 Yrs $34197mill.
LT Debt $123173 mill. LT Interest $3695 mill.
Incl. $373.0 mill. capitalized leases.
(Total interest coverage: 7.1x)
(64% of Total Cap’l.)
Leases, Uncapitalized Annual rentals $4327 mill.
Pension Assets-12/20 $20.1 bill.
Oblig. $22.2 bill.
($MILL.)
Cash Assets
Other
Current Assets
Accts Payable
Debt Due
Other
Current Liab.
2745
31891
34636
22501
7190
8239
37930
ANNUAL RATES Past
of change (per sh)
10 Yrs.
Revenues
-1.0%
‘‘Cash Flow’’
1.0%
Earnings
6.0%
Dividends
3.0%
Book Value
-2.0%
Calendar
2018
2019
2020
2021
2022
Calendar
2018
2019
2020
2021
2022
Calendar
2017
2018
2019
2020
2021
127079
13337
29.9%
10.5%
89.0%
9.9%
124212
89947
11.0%
108.4%
108.4%
45.0%
59%
31.88 31.00 32.15 32.80
8.85
9.00
9.05
9.10
4.81
4.90
5.10
5.20
2.42
2.47
2.52
2.57
4.34
4.40
4.40
4.45
14.84 15.25 15.55 15.85
4135.8 4138.1 4140.0 4145.00
12.1
11.8 Bold figures are
Value Line
.64
.61
estimates
4.2%
4.3%
THIS
STOCK
VL ARITH.*
INDEX
6.6
30.6
34.6
50.1
45.4
108.8
© VALUE LINE PUB. LLC
20
15
24-26
Revenues per sh
35.20
‘‘Cash Flow’’ per sh
9.25
(A)
Earnings per sh
5.65
Div’ds Decl’d per sh (B) ■
2.70
Cap’l Spending per sh
4.40
Book Value per sh
13.85
Common Shs Outst’g (C) 4000.0
Avg Ann’l P/E Ratio
17.5
Relative P/E Ratio
.95
Avg Ann’l Div’d Yield
2.7%
131620 125980 126034 130863 131868 128292 133050 135900 Revenues ($mill)
16324 15809 15297 19279 19920 18348 21115 21555 Net Profit ($mill)
34.6% 33.7% 32.9% 18.3% 23.3% 23.4% 24.0% 25.0% Income Tax Rate
12.4% 12.5% 12.1% 14.7% 15.1% 14.4% 15.8% 15.9% Net Profit Margin
85.3% 81.4% 71.1% 65.9% 61.6% 80.0% 80.0% 80.0% Long-Term Debt Ratio
13.5% 17.4% 27.9% 33.1% 37.5% 20.0% 20.0% 20.0% Common Equity Ratio
121547 129465 159920 160583 163547 172250 174000 175500 Total Capital ($mill)
83541 84751 88568 89286 91915 86700 87200 87500 Net Plant ($mill)
13.7% 12.4%
9.7% 12.2% 12.4% 11.5% 12.0% 12.0% Return on Total Cap’l
99.4% 70.2% 34.2% 36.3% 32.4% 37.0% 38.0% 38.0% Return on Shr. Equity
99.4% 70.2% 34.2% 36.3% 32.4% 37.0% 38.0% 38.0% Return on Com Equity
47.4% 29.1% 13.0% 17.9% 16.1% 37.0% 37.0% 38.0% Retained to Com Eq
52%
59%
62%
51%
50%
56%
49%
49% All Div’ds to Net Prof
140750
22600
25.0%
16.1%
79.0%
21.0%
177000
89500
13.0%
40.0%
40.0%
40.0%
48%
22171
32423
54594
20658
5889
13113
39660
BUSINESS: Verizon Communications was created by the merger
of Bell Atlantic and GTE in June of 2000. It is a diversified telecom
company with a network that covers a population of about 298 million and provides service to nearly 98.2 million. Acquired MCI, 1/06;
Alltel, 1/09; Verizon Wireless, 2/14. Also the largest provider of print
and on-line directory information. Has a wireline presence in 28
states & Washington, D.C.; a wireless presence in 50 states & D.C.;
operations in 19 countries. 2020 revenue breakdown: Consumer
Group, 67%; Business Group, 26%; corporate, 7%. Has about
132,200 employees. Chairman: Lowell McAdam; CEO: Hans Vestberg. Inc.: Delaware. Address: 1095 Avenue of the Americas, NY,
NY 10036. Telephone: 212-395-1000. Internet: www.verizon.com.
Past Est’d ’17-’19
5 Yrs.
to ’24-’26
-1.0%
1.5%
3.5%
1.0%
6.5%
3.5%
2.5%
2.0%
10.0%
1.0%
Verizon seems poised to ring up solid
sales and earnings comparisons both
this year and next. Notably, this bluechip telecommunications giant reported
December-period earnings of $1.21 a
share, a nickel higher than our estimate
and an $0.08 improvement on the year-ago
figure, on a relatively flat year-over-year
top-line comparison. Total Verizon Consumer revenues for the quarter were down
1.2% year over year, the result of a decline
in wireless equipment revenue due to
softer volumes in the final period of 2020.
The results at Verizon Business were rather similar, with the segment posting a
0.3% drop in year-over-year revenues.
Going forward, we look for top-line growth
to resume, while the bottom line ought to
reap the rewards of management’s recently achieved goal of $10 billion in cash savings by 2021. As a result, we have upped
our 2021 earnings estimate by a nickel, to
$5.10 a share, on roughly a 3.5% revenue
improvement, and we have initiated a
2022 share-net estimate of $5.20.
Nevertheless, investors do not seem
overly enthused. Indeed, VZ stock has
dropped about 8% in value since our early
December review, versus a 4% uptick in
the S&P 500 Index over the same period.
The company’s finances are not a
cause for concern. Verizon ended the
December quarter with $22.171 billion in
cash on its ledger (up from $3.584 billion
this time last year), and long-term debt of
$123.2 billion (up about $22.5 billion from
a year ago). And going forward, we would
look for management to continue to put its
spare cash to good use, with further dividend hikes (likely later this year) and additional acquisitions probably in the cards.
Notably, management has made it clear
that it is committed to enhancing
Verizon’s strategic capabilities and its
spectrum assets.
Investors seeking a long-term commitment may wish to consider staking a
position here. At this juncture, VZ
stock’s capital-appreciation potential 3 to 5
years hence is well above the average selection under our review. What’s more,
income-seeking accounts will find the issue’s dividend yield to their liking, as it is
more than double that of the Value Line
median.
Kenneth A. Nugent
March 12, 2021
3584
34879
37473
21806
10777
12285
44868
QUARTERLY REVENUES ($ mill.)
Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
31772 32203 32607 34281 130863
32128 32071 32894 34775 131868
31610 30400 31543 34692 128292
32500 32300 32750 35500 133050
33200 33000 33450 36250 135900
EARNINGS PER SHARE A
Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
1.17
1.20
1.22
1.12
4.71
1.20
1.23
1.25
1.13
4.81
1.26
1.18
1.25
1.21
4.90
1.28
1.28
1.29
1.25
5.10
1.31
1.30
1.32
1.27
5.20
QUARTERLY DIVIDENDS PAID B■
Full
Mar.31 Jun.30 Sep.30 Dec.31 Year
.58
.58
.58
.59
2.33
.59
.59
.59
.6025 2.37
.6025 .6025 .6025 .615 2.42
.615
.615
.615
.6275 2.47
.6275
(A) Based on diluted shares. Excl. n/r gains ’06 MCI pro forma.
(losses): ’06, ($0.42). Next earnings report late
April. (B) Div’d paid in early Feb., May, Aug. &
Nov. ■ Div’d reinv. plan avail. (C) In mill. (D)
© 2021 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No part
of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.
Company’s Financial Strength
Stock’s Price Stability
Price Growth Persistence
Earnings Predictability
A++
100
35
90
To subscribe call 1-800-VALUELINE

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