VZ – Market expectations are for Uniform ROA to fade, and management may have concerns about growth, investments, and profitability

May 9, 2022

  • Verizon Communications Inc. (VZ) currently trades below corporate but above its historical averages relative to Uniform earnings, with a 18.8x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to fade to 7%, accompanied by 5% Uniform asset growth.

  • However, analysts expect Uniform ROA to improve to 9% by 2023, accompanied by 1% Uniform asset growth.

  • If sustained going forward, these levels would imply a stock price closer to $60, representing approximately 16% equity upside for the firm.

  • That said, the firm’s most recent earnings call suggests management may have concerns about growth, investments, and profitability.

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