Verizon shares are down 7.8% YTD. Should I invest?
- Verizon increased its FY21 forecast
- Warren Buffett's Berkshire Hathaway increased its ownership in Verizon
- Verizon could deliver strong shareholder value for many years to come
Verizon Communications (NYSE: VZ) shares have weakened more than 7% since the beginning of January, and the current share price stands around $56.45. This is a stable company with a good position in the market, and it is important to say that Warren Buffett’s Berkshire Hathaway increased its ownership in Verizon.
Fundamental analysis: Verizon increased its FY21 forecast
Verizon Communications is an American multinational telecommunication company that offers communications, information, and entertainment products and services. Verizon is a reliable cash flow giant with a positive risk/reward profile, and Verizon shares are a good choice for any investor seeking secure dividend income.
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Verizon reported Q4 results in the last week of January; total revenue has decreased only -0.2% Y/Y to $34.7B while Q4 GAAP EPS was $1.11. Verizon has proven stability in challenging market conditions and increased its FY21 forecast.
The full-year earnings were $4.30 per share on a GAAP basis, and the company launched the nationwide 5G that is covering 230 million POPs in 2,700 cities. Adjusted EBITDA for Q4 was $11.7 billion, while the full-year consolidated adjusted EBITDA totaled $47.1 billion.
The FY21 forecast includes $5.00-5.15 EPS, and despite the challenging pandemic environment, the dividend remains safe. The dividend yield is around 4.6% at the current share price, and most financial analysts are expecting a dividend increase for the upcoming years.
“We are excited to deliver 2021 expectations that include accelerating revenue and earnings growth driven by our five growth vectors as wireless service strengthens and 5G continues to scale. For 2021, we expect service and other revenue growth of at least 2%, reflecting an acceleration of total wireless service and Fios revenue growth as well as continued momentum in Verizon Media, partially offset by ongoing legacy wireline product declines,” said Matthew Ellis, Chief Financial Officer of Verizon.
Verizon is positioned for long-term, sustainable growth, and it is also important to say that Warren Buffett’s Berkshire Hathaway increased its ownership in this company. Verizon is fairly valued at the current stock price, and it could deliver strong shareholder value for many years to come.
Technical analysis: Verizon shares are still unable to stabilize above $60 resistance
The current share price allows investors to achieve good returns, and with the market capitalization of $224B, this company is still undervalued relative to its competition.
The critical support levels are $54 and $50; $60 and $62 represent the current resistance levels. If the price jumps above $60, it would be a signal to trade shares, and the next target could be around $62.
On the other side, if the price falls below the $54 support level, we have the open way to $50 support.
Verizon is a reliable cash flow giant with a positive risk/reward profile, and it could deliver strong shareholder value for many years to come. For 2021, the company expects service and other revenue growth of at least 2%, and it is important to say that Warren Buffett’s Berkshire Hathaway increased its ownership in Verizon.
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