VZ Dips 5.1% In One Day, Time To Buy The Stock?

We believe there are a few things to fear in VZ stock given its overall Weak operating performance and financial condition. Hence, despite its Low valuation, this makes the stock look Risky. Here is our multi-factor assessment.

VZ stock has fallen meaningfully recently and we currently find it risky. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Let’s get into details of each of the assessed factors but before that, for quick background: With $175 Bil in market cap, Verizon Communications offers communications, technology, and entertainment services, including wireless plans, internet access, private networking, cloud connectivity, and software-defined networking for consumers and businesses.

[1] Valuation Looks Low

This table highlights how VZ is valued vs broader market. For more details see: VZ Valuation Ratios

[2] Growth Is Weak

• Verizon Communications has seen its top line grow at an average rate of 0.7% over the last 3 years
• Its revenues have grown 2.1% from $134 Bil to $137 Bil in the last 12 months
• Also, its quarterly revenues grew 5.2% to $35 Bil in the most recent quarter from $33 Bil a year ago.

This table highlights how VZ is growing vs broader market. For more details see: VZ Revenue Comparison

[3] Profitability Appears Strong

• VZ last 12 month operating income was $29 Bil representing operating margin of 21.5%
• With cash flow margin of 27.1%, it generated nearly $37 Bil in operating cash flow over this period
• For the same period, VZ generated nearly $18 Bil in net income, suggesting net margin of about 13.3%

This table highlights how VZ profitability vs broader market. For more details see: VZ Operating Income Comparison

[4] Financial Stability Looks Weak

• VZ Debt was $170 Bil at the end of the most recent quarter, while its current Market Cap is $175 Bil. This implies Debt-to-Equity Ratio of 96.5%
• VZ Cash (including cash equivalents) makes up $3.4 Bil of $383 Bil in total Assets. This yields a Cash-to-Assets Ratio of 0.9%

[4] Downturn Resilience Is Weak

VZ has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• VZ stock fell 48.5% from a high of $59.52 on 10 May 2021 to $30.67 on 13 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $46.49 on 10 March 2025 , and currently trades at $41.44

 
2020 Covid Pandemic

• VZ stock fell 18.7% from a high of $61.40 on 1 January 2020 to $49.94 on 25 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 3 December 2020

 
2008 Global Financial Crisis

• VZ stock fell 45.6% from a high of $46.07 on 31 October 2007 to $25.08 on 24 October 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 3 October 2012

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.