Should I buy Verizon shares after Berkshire Hathaway increased its stake?

By:
on May 18, 2021
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  • In the first quarter of 2021, Berkshire Hathaway increased its stake in Verizon by 8.3%
  • Verizon trades at less than six times 2020 EBITDA
  • Verizon shares could be a good choice for any investor seeking secure dividend income

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Verizon Communications (NYSE: VZ) is a stable company with a good position in the market, but the price of the stock is still not able to stabilize above the $60 resistance level. Verizon continues to expand its business, and at the current stock price, this company is fairly valued.

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Fundamental analysis: Berkshire Hathaway increased its stake in Verizon

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Verizon Communications is an American multinational telecommunication company that generates steady revenue and a healthy profit margin. Verizon reported first-quarter results in April; total revenue has increased by 4.1% Y/Y to $32.9 billion while GAAP EPS for the same period was $1.27 (compared with $1.00 in 1Q 2020).

It is important to say that adjusted EBITDA (non-GAAP) was $12.2 billion in first-quarter 2021, while the net income increased by 25.4% from first-quarter 2020 and reached $5.4 billion. Total wireless service revenue has risen 2.4%, business revenue has increased by 1.3%, and customer revenue has increased by 4.7%.

“Verizon is off to an excellent start in 2021 as we met the challenge of intense competition in the first quarter by achieving revenue growth across our three business segments. We continue to strengthen our networks, execute on our Network-as-a-Service strategy and focus on the five vectors that underpin our growth framework and position us to deliver success in 2021 and beyond,” said Verizon Chairman and CEO Hans Vestberg.

Total revenue has increased above expectations (beats by $440 million), and the company raised its outlook for the 2021 fiscal year. Verizon expects revenue growth of at least 2% and adjusted EPS of $5 to $5.15 for the 2021 fiscal year.

Verizon Communications is a stable company with a good position in the market, while its shares could be a good choice for any investor seeking secure dividend income. The dividend yield is around 4.3% at the current share price, and it is also important to say that Warren Buffett’s Berkshire Hathaway increased its ownership in this company.

In the first quarter of 2021, Berkshire Hathaway increased its stake in Verizon by 8.3%, and the company currently has 158,824,575 shares. Verizon trades at less than six times 2020 EBITDA, and with a market capitalization of $242 billion, shares of this company are fairly valued.

Technical analysis: Verizon shares have stabilized above the $50 support level

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Data source: tradingview.com

If the price jumps above $60 resistance, it would be a signal to trade shares, and the next target could be around $65. Rising above $65 supports the continuation of the bullish trend for Verizon shares, but if the price falls below $50, it would be a strong “sell” signal.

Summary

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Verizon Communications generates steady revenue and a healthy profit margin, while its shares could be a good choice for any investor seeking secure dividend income. 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 in the first quarter of 2021.

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