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Valens Research

VZ - Embedded Expectations Analysis - 2020 05 11

Verizon Communications Inc. (VZ:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings with a 14.8x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about revenue declines, Consumer Group bad debt, and macro uncertainty

Specifically, management may be exaggerating their preparations for network usage spikes and the customer service opportunities available during this time, and they may have concerns about COVID-19's impact on their customers' ability to pay their bills. Furthermore, they may have concerns about customer behavior changes due to the macro environment, the magnitude of Consumer Group bad debt, and the strength of their balance sheet. In addition, they may lack confidence in their ability to sustain phone and wireless gross adds and Consumer Group margin improvements through promotional spend reductions. Moreover, they may be concerned about market uncertainty, limited customer engagement, and revenue declines, particularly in Verizon Media
Underlying
Verizon Communications Inc.

Verizon Communications is a holding company. Through its subsidiaries, the company provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. The company has two reportable segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The company's Consumer segment provides consumer-focused wireless and wireline communications services and products under the Verizon brand and through wholesale and other arrangements. The company's Business segment provides, among others, wireless and wireline communications services and products, video and data services, corporate networking solutions, security and managed network services.

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Valens Research
Valens Research

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