How Verizon Could Offer Stress-Free Double-Digit Returns in 2025

Stock Performance and Valuation - Verizon Communications stock trades at $41 90, down 4 12% with a 52-week range of $31 26 to $45 36 [1] - The stock has a dividend yield of 6 47%, a P/E ratio of 15 69, and a price target of $46 31 [1] - The stock is considered a deep value relative to its historical average and the S&P 500, with a beta of nearly 0 5x [1] - The stock is poised for a sustained rally, potentially reaching $48 this year and $58 next year, representing gains of 10% and 35% respectively [1] Financial Performance and Outlook - Q3 2024 revenue was $33 33 billion, down 0 1% due to an 8% decline in equipment sales, but services revenue grew 1 7% [1][2] - Adjusted EBITDA increased year-over-year, with free cash flow stable at $4 5 billion, down only $0 1 billion despite severance charges [3] - The company reaffirmed its guidance, targeting adjusted EPS of $4 50 to $4 70, with a midpoint of $4 60, better than the consensus forecast of $4 57 [3] - The company expects continued growth in wireless and broadband subscribers, driven by 5G network expansion and increased use cases in consumer and business applications [2] Analyst Sentiment and Dividend - Analysts upgraded Verizon's rating to Buy from Hold and raised the price target by nearly 10%, with a consensus target of $46 30 [4] - The stock yields 6 43% with an annual dividend of $2 71 and a 20-year track record of dividend increases [4] - The dividend payout ratio is 101 12%, but the balance sheet supports continued payments and growth, with shareholder equity increasing by 4% [5] - Verizon is on track to become a Dividend Aristocrat by 2029 [5] Market Opportunity and Balance Sheet - The recent pullback in stock price presents a buying opportunity, with potential for a sustained rally lasting four to six quarters [6] - The balance sheet shows positive cash flow, a doubling of cash balance, rising assets, and declining liabilities, with leverage down 15 basis points to 1 3x equity [5] - The company maintains a flexible financial position, utilizing debt but keeping leverage low [5]