Intrinsic value of Verizon Communications - VZ

Previous Close

$53.70

  Intrinsic Value

$59.31

stock screener

  Rating & Target

hold

+10%

Previous close

$53.70

 
Intrinsic value

$59.31

 
Up/down potential

+10%

 
Rating

hold

We calculate the intrinsic value of VZ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 221.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  132,840
  139,960
  147,412
  155,212
  163,380
  171,935
  180,897
  190,288
  200,130
  210,447
  221,262
  232,603
  244,496
  256,970
  270,053
  283,778
  298,178
  313,285
  329,138
  345,773
  363,229
  381,550
  400,778
  420,959
  442,141
  464,375
  487,714
  512,213
  537,930
  564,928
Variable operating expenses, $m
  103,589
  108,456
  113,550
  118,882
  124,465
  130,313
  136,439
  142,859
  149,587
  156,639
  151,248
  159,001
  167,130
  175,657
  184,600
  193,982
  203,825
  214,153
  224,989
  236,360
  248,293
  260,816
  273,960
  287,755
  302,234
  317,433
  333,386
  350,133
  367,713
  386,168
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  103,589
  108,456
  113,550
  118,882
  124,465
  130,313
  136,439
  142,859
  149,587
  156,639
  151,248
  159,001
  167,130
  175,657
  184,600
  193,982
  203,825
  214,153
  224,989
  236,360
  248,293
  260,816
  273,960
  287,755
  302,234
  317,433
  333,386
  350,133
  367,713
  386,168
Operating income, $m
  29,251
  31,504
  33,862
  36,330
  38,915
  41,622
  44,458
  47,429
  50,543
  53,808
  70,014
  73,603
  77,366
  81,313
  85,453
  89,796
  94,352
  99,133
  104,149
  109,413
  114,937
  120,734
  126,818
  133,204
  139,906
  146,942
  154,327
  162,079
  170,217
  178,760
EBITDA, $m
  54,628
  57,556
  60,620
  63,828
  67,187
  70,705
  74,390
  78,252
  82,299
  86,542
  90,990
  95,653
  100,544
  105,674
  111,054
  116,698
  122,620
  128,832
  135,351
  142,192
  149,371
  156,905
  164,812
  173,111
  181,821
  190,965
  200,562
  210,637
  221,213
  232,315
Interest expense (income), $m
  4,085
  6,323
  6,945
  7,598
  8,281
  8,996
  9,745
  10,529
  11,351
  12,212
  13,114
  14,060
  15,052
  16,092
  17,182
  18,326
  19,526
  20,784
  22,104
  23,490
  24,943
  26,468
  28,069
  29,749
  31,512
  33,362
  35,304
  37,343
  39,483
  41,729
  44,087
Earnings before tax, $m
  22,928
  24,559
  26,264
  28,049
  29,919
  31,877
  33,928
  36,078
  38,331
  40,694
  55,954
  58,551
  61,274
  64,130
  67,127
  70,270
  73,568
  77,028
  80,659
  84,470
  88,468
  92,665
  97,069
  101,692
  106,544
  111,638
  116,984
  122,596
  128,488
  134,673
Tax expense, $m
  6,190
  6,631
  7,091
  7,573
  8,078
  8,607
  9,161
  9,741
  10,349
  10,987
  15,107
  15,809
  16,544
  17,315
  18,124
  18,973
  19,863
  20,798
  21,778
  22,807
  23,886
  25,019
  26,209
  27,457
  28,767
  30,142
  31,586
  33,101
  34,692
  36,362
Net income, $m
  16,737
  17,928
  19,173
  20,476
  21,841
  23,270
  24,768
  26,337
  27,982
  29,706
  40,846
  42,742
  44,730
  46,815
  49,003
  51,297
  53,705
  56,231
  58,881
  61,663
  64,582
  67,645
  70,860
  74,235
  77,777
  81,495
  85,398
  89,495
  93,796
  98,311

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  271,102
  285,633
  300,840
  316,759
  333,428
  350,887
  369,178
  388,343
  408,429
  429,483
  451,556
  474,701
  498,972
  524,428
  551,129
  579,140
  608,526
  639,358
  671,710
  705,658
  741,284
  778,673
  817,913
  859,099
  902,328
  947,704
  995,334
  1,045,332
  1,097,817
  1,152,915
Adjusted assets (=assets-cash), $m
  271,102
  285,633
  300,840
  316,759
  333,428
  350,887
  369,178
  388,343
  408,429
  429,483
  451,556
  474,701
  498,972
  524,428
  551,129
  579,140
  608,526
  639,358
  671,710
  705,658
  741,284
  778,673
  817,913
  859,099
  902,328
  947,704
  995,334
  1,045,332
  1,097,817
  1,152,915
Revenue / Adjusted assets
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
Average production assets, $m
  157,415
  165,853
  174,683
  183,926
  193,605
  203,743
  214,363
  225,491
  237,154
  249,379
  262,196
  275,635
  289,728
  304,509
  320,013
  336,277
  353,341
  371,243
  390,028
  409,740
  430,427
  452,136
  474,921
  498,836
  523,937
  550,284
  577,941
  606,972
  637,448
  669,440
Working capital, $m
  -1,860
  -1,959
  -2,064
  -2,173
  -2,287
  -2,407
  -2,533
  -2,664
  -2,802
  -2,946
  -3,098
  -3,256
  -3,423
  -3,598
  -3,781
  -3,973
  -4,174
  -4,386
  -4,608
  -4,841
  -5,085
  -5,342
  -5,611
  -5,893
  -6,190
  -6,501
  -6,828
  -7,171
  -7,531
  -7,909
Total debt, $m
  128,605
  140,694
  153,347
  166,592
  180,460
  194,986
  210,204
  226,149
  242,861
  260,378
  278,743
  297,999
  318,193
  339,372
  361,588
  384,892
  409,341
  434,994
  461,911
  490,156
  519,797
  550,904
  583,552
  617,818
  653,785
  691,537
  731,166
  772,764
  816,432
  862,273
Total liabilities, $m
  225,557
  237,646
  250,299
  263,544
  277,412
  291,938
  307,156
  323,101
  339,813
  357,330
  375,695
  394,951
  415,145
  436,324
  458,540
  481,844
  506,293
  531,946
  558,863
  587,108
  616,749
  647,856
  680,504
  714,770
  750,737
  788,489
  828,118
  869,716
  913,384
  959,225
Total equity, $m
  45,545
  47,986
  50,541
  53,216
  56,016
  58,949
  62,022
  65,242
  68,616
  72,153
  75,861
  79,750
  83,827
  88,104
  92,590
  97,295
  102,232
  107,412
  112,847
  118,551
  124,536
  130,817
  137,409
  144,329
  151,591
  159,214
  167,216
  175,616
  184,433
  193,690
Total liabilities and equity, $m
  271,102
  285,632
  300,840
  316,760
  333,428
  350,887
  369,178
  388,343
  408,429
  429,483
  451,556
  474,701
  498,972
  524,428
  551,130
  579,139
  608,525
  639,358
  671,710
  705,659
  741,285
  778,673
  817,913
  859,099
  902,328
  947,703
  995,334
  1,045,332
  1,097,817
  1,152,915
Debt-to-equity ratio
  2.820
  2.930
  3.030
  3.130
  3.220
  3.310
  3.390
  3.470
  3.540
  3.610
  3.670
  3.740
  3.800
  3.850
  3.910
  3.960
  4.000
  4.050
  4.090
  4.130
  4.170
  4.210
  4.250
  4.280
  4.310
  4.340
  4.370
  4.400
  4.430
  4.450
Adjusted equity ratio
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16,737
  17,928
  19,173
  20,476
  21,841
  23,270
  24,768
  26,337
  27,982
  29,706
  40,846
  42,742
  44,730
  46,815
  49,003
  51,297
  53,705
  56,231
  58,881
  61,663
  64,582
  67,645
  70,860
  74,235
  77,777
  81,495
  85,398
  89,495
  93,796
  98,311
Depreciation, amort., depletion, $m
  25,377
  26,052
  26,758
  27,498
  28,272
  29,083
  29,933
  30,823
  31,756
  32,734
  20,976
  22,051
  23,178
  24,361
  25,601
  26,902
  28,267
  29,699
  31,202
  32,779
  34,434
  36,171
  37,994
  39,907
  41,915
  44,023
  46,235
  48,558
  50,996
  53,555
Funds from operations, $m
  42,114
  43,980
  45,931
  47,974
  50,113
  52,353
  54,700
  57,160
  59,738
  62,440
  61,822
  64,793
  67,908
  71,176
  74,604
  78,199
  81,972
  85,930
  90,084
  94,442
  99,016
  103,816
  108,854
  114,142
  119,692
  125,518
  131,634
  138,053
  144,792
  151,866
Change in working capital, $m
  -95
  -100
  -104
  -109
  -114
  -120
  -125
  -131
  -138
  -144
  -151
  -159
  -167
  -175
  -183
  -192
  -202
  -212
  -222
  -233
  -244
  -256
  -269
  -283
  -297
  -311
  -327
  -343
  -360
  -378
Cash from operations, $m
  42,209
  44,080
  46,035
  48,083
  50,227
  52,473
  54,826
  57,291
  59,876
  62,585
  61,973
  64,951
  68,075
  71,351
  74,787
  78,392
  82,174
  86,142
  90,306
  94,675
  99,260
  104,073
  109,123
  114,425
  119,989
  125,829
  131,960
  138,396
  145,152
  152,244
Maintenance CAPEX, $m
  -11,945
  -12,593
  -13,268
  -13,975
  -14,714
  -15,488
  -16,299
  -17,149
  -18,039
  -18,972
  -19,950
  -20,976
  -22,051
  -23,178
  -24,361
  -25,601
  -26,902
  -28,267
  -29,699
  -31,202
  -32,779
  -34,434
  -36,171
  -37,994
  -39,907
  -41,915
  -44,023
  -46,235
  -48,558
  -50,996
New CAPEX, $m
  -8,103
  -8,437
  -8,830
  -9,244
  -9,679
  -10,138
  -10,620
  -11,128
  -11,663
  -12,225
  -12,817
  -13,439
  -14,093
  -14,781
  -15,504
  -16,264
  -17,063
  -17,903
  -18,785
  -19,712
  -20,686
  -21,710
  -22,785
  -23,914
  -25,101
  -26,347
  -27,656
  -29,031
  -30,476
  -31,992
Cash from investing activities, $m
  -20,048
  -21,030
  -22,098
  -23,219
  -24,393
  -25,626
  -26,919
  -28,277
  -29,702
  -31,197
  -32,767
  -34,415
  -36,144
  -37,959
  -39,865
  -41,865
  -43,965
  -46,170
  -48,484
  -50,914
  -53,465
  -56,144
  -58,956
  -61,908
  -65,008
  -68,262
  -71,679
  -75,266
  -79,034
  -82,988
Free cash flow, $m
  22,161
  23,049
  23,937
  24,865
  25,834
  26,847
  27,906
  29,014
  30,174
  31,387
  29,206
  30,537
  31,931
  33,391
  34,922
  36,526
  38,208
  39,972
  41,821
  43,760
  45,795
  47,929
  50,168
  52,516
  54,981
  57,567
  60,281
  63,129
  66,119
  69,256
Issuance/(repayment) of debt, $m
  11,510
  12,090
  12,652
  13,245
  13,869
  14,526
  15,218
  15,945
  16,711
  17,517
  18,365
  19,256
  20,194
  21,179
  22,215
  23,305
  24,449
  25,652
  26,917
  28,245
  29,641
  31,107
  32,648
  34,266
  35,967
  37,752
  39,628
  41,599
  43,668
  45,841
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  11,510
  12,090
  12,652
  13,245
  13,869
  14,526
  15,218
  15,945
  16,711
  17,517
  18,365
  19,256
  20,194
  21,179
  22,215
  23,305
  24,449
  25,652
  26,917
  28,245
  29,641
  31,107
  32,648
  34,266
  35,967
  37,752
  39,628
  41,599
  43,668
  45,841
Total cash flow (excl. dividends), $m
  33,671
  35,139
  36,590
  38,110
  39,703
  41,373
  43,124
  44,960
  46,885
  48,904
  47,571
  49,793
  52,125
  54,571
  57,137
  59,831
  62,658
  65,624
  68,738
  72,006
  75,436
  79,036
  82,816
  86,783
  90,948
  95,320
  99,909
  104,728
  109,787
  115,097
Retained Cash Flow (-), $m
  -2,449
  -2,441
  -2,555
  -2,674
  -2,800
  -2,933
  -3,073
  -3,220
  -3,374
  -3,537
  -3,708
  -3,888
  -4,078
  -4,277
  -4,486
  -4,706
  -4,937
  -5,180
  -5,435
  -5,703
  -5,985
  -6,281
  -6,592
  -6,919
  -7,262
  -7,623
  -8,002
  -8,400
  -8,818
  -9,256
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  31,222
  32,698
  34,035
  35,435
  36,902
  38,440
  40,051
  41,740
  43,511
  45,367
  43,863
  45,905
  48,047
  50,294
  52,652
  55,125
  57,721
  60,444
  63,303
  66,302
  69,450
  72,755
  76,223
  79,864
  83,685
  87,697
  91,908
  96,328
  100,969
  105,841
Discount rate, %
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
  28,513
  27,035
  25,243
  23,344
  21,368
  19,345
  17,311
  15,298
  13,342
  11,473
  9,010
  7,537
  6,199
  5,007
  3,969
  3,083
  2,344
  1,743
  1,266
  897
  619
  415
  271
  171
  105
  62
  36
  20
  10
  5
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc.’s operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc., owns a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail.

FINANCIAL RATIOS  of  Verizon Communications (VZ)

Valuation Ratios
P/E Ratio 16.7
Price to Sales 1.7
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 9.6
Price to Free Cash Flow 42.7
Growth Rates
Sales Growth Rate -4.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -36.5%
Cap. Spend. - 3 Yr. Gr. Rate 0.5%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 468.1%
Total Debt to Equity 479.8%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 6.8%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 67.4%
Return On Equity - 3 Yr. Avg. 76.5%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 59.2%
Gross Margin - 3 Yr. Avg. 60%
EBITDA Margin 32.5%
EBITDA Margin - 3 Yr. Avg. 32.7%
Operating Margin 21.5%
Oper. Margin - 3 Yr. Avg. 20.7%
Pre-Tax Margin 16.7%
Pre-Tax Margin - 3 Yr. Avg. 16.7%
Net Profit Margin 10.4%
Net Profit Margin - 3 Yr. Avg. 10.5%
Effective Tax Rate 35.2%
Eff/ Tax Rate - 3 Yr. Avg. 30.6%
Payout Ratio 70.6%

VZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VZ stock intrinsic value calculation we used $126034 million for the last fiscal year's total revenue generated by Verizon Communications. The default revenue input number comes from 0001 income statement of Verizon Communications. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our VZ stock valuation model: a) initial revenue growth rate of 5.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.5%, whose default value for VZ is calculated based on our internal credit rating of Verizon Communications, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Verizon Communications.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of VZ stock the variable cost ratio is equal to 78.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for VZ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Verizon Communications.

Corporate tax rate of 27% is the nominal tax rate for Verizon Communications. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the VZ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for VZ are equal to 118.5%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Verizon Communications operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for VZ is equal to -1.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $43096 million for Verizon Communications - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 4131.94 million for Verizon Communications is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Verizon Communications at the current share price and the inputted number of shares is $221.9 billion.

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COMPANY NEWS

▶ Verizon to redeem debt securities   [08:00AM  GlobeNewswire]
▶ Why Verizon Is Poised for 20% Returns   [06:00AM  Investopedia]
▶ 7 Stocks to Buy and Hold Through Any Market Selloff   [Oct-15-18 03:00PM  InvestorPlace]
▶ [$$] Fiber Damage Vexes Verizon After Hurricane Michael   [Oct-14-18 09:00PM  The Wall Street Journal]
▶ [$$] Verizon Changes Exit Package for Workers It Planned to Outsource   [Oct-11-18 08:51PM  The Wall Street Journal]
▶ What happened? What should you do?   [07:44PM  CNBC Videos]
▶ JPMorgan's Q3 Wireless Cheat Sheet   [01:51PM  Benzinga]
▶ 3 Dividend Stocks Perfect for Retirees   [Oct-10-18 06:17PM  Motley Fool]
▶ Denver's not getting a 5G network anytime soon, and here's why   [05:22PM  American City Business Journals]
▶ Senators demand answers from Super Micro on Chinese backdoor hack   [09:15AM  American City Business Journals]
▶ 3 Sectors, 3 Internet of Things Stocks to Buy   [Oct-09-18 02:57PM  InvestorPlace]
▶ 5G Rollout Could Lift Verizon Stock   [Oct-05-18 08:04PM  Barrons.com]
▶ Verizon Has Mobile Strength but Faces Legacy Pressure   [Oct-04-18 05:17PM  Barrons.com]
▶ 2nd phase of large spec office project set to rise in Central Florida   [02:08PM  American City Business Journals]
▶ Verizon trims workforce in effort to cut $10 billion in costs   [10:47AM  American City Business Journals]
▶ Internet service providers sue California over fresh net neutrality law   [09:53AM  American City Business Journals]
▶ [$$] Verizons Severance Offer Goes to About 44,000 Employees   [Oct-03-18 07:47PM  The Wall Street Journal]
▶ Whats up with that blue 404 Store Not Found building in Fremont?   [04:25PM  American City Business Journals]
▶ [$$] Verizon's Severance Offer Goes to 44,000 Workers   [01:19PM  The Wall Street Journal]
▶ Whats up with that blue 404 Store Not Found building in Denver?   [09:30AM  American City Business Journals]
▶ Verizon moves up timeline to leave ABQ call center   [09:15AM  American City Business Journals]
▶ The biggest challenge in building cybersecurity   [Oct-02-18 09:10PM  CNBC Videos]
▶ Can Stability in the Price of Bitcoin Last?   [09:37AM  InvestorPlace]

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