Should I invest in Verizon Communications after Q4 results?

Verizon Communications Inc. (NYSE: VZ) shares remain under pressure even though the company reported strong fourth-quarter results this Tuesday.

Outlook remains positive

Verizon Communications reported strong fourth-quarter results today; total revenue has increased by 4.8% Y/Y to $34.1 billion, slightly above expectations, while the non- GAAP earnings per share were $1.31 (beats by $0.03).

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Wireless service revenue has increased by 6.5% to $17.8 billion in the fourth quarter, mainly due to volume growth and the contribution from the TracFone acquisition.

Verizon completed the acquisition of TracFone on November 23, and the revenue associated with TracFone was approximately $700 million higher than the revenue in the fourth quarter of 2020.

Service and other revenue grew 2.6% in the fourth quarter, and it is important to say that consolidated adjusted EBITDA in the fourth quarter was $11.8 billion (relatively flat compared to Q4 2020). Full-year consolidated adjusted EBITDA totaled $48.4 billion, representing an increase of 2.8% compared with the prior year.

Verizon’s business has proven improvements throughout the fourth fiscal quarter, and the company’s management announced that service and other revenue should grow by 3% in the 2022 fiscal year.

Wireless service revenue should increase between 9% and 10%, while adjusted EBITDA should grow approximately 3% in 2022. Matt Ellis, Chief Financial Officer of Verizon, added:

We have great momentum from the strong operating and financial results last year and are well-positioned heading into the new year, and that momentum is reflected in our guidance for 2022. We took many strategic actions to position the company for better growth, and our increased guidance disclosures provide greater insight into our financial outlook.

Verizon’s 4.8% dividend looks safe; the company is focused on further optimizing its cash position and debt maturity profile.

Verizon began the first quarter of 2022 with strong momentum in business activity, its shares are trading at less than five times TTM EBITDA, and with a market capitalization of $223 billion, they are not expensive.

$50 represents strong support

Verizon’s stock price has fallen more than 10% after reaching the highest level in 2021 of $59.79 on May 21, and the risk of further decline still persists. Despite this, shares of this company could provide strong returns for long-term investors.

If the price falls in the upcoming period, every price in a range from $35 to $45 could be a very good opportunity to invest in Verizon stock.

Summary

Verizon Communications reported strong fourth-quarter results this Tuesday, and the company’s management announced that revenues should grow in the 2022 fiscal year. Verizon’s 4.8% dividend looks safe; the company is focused on further optimizing its cash position and debt maturity profile.

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