VZ Financial Analysis

Analysis Date: 1/25/2025

Business Model

Verizon's revenue is generated primarily from wireless services, including voice and data plans, and broadband services, including Fios and fixed wireless access. They also generate revenue from equipment sales and business wireline services.

Revenue Sources

• Wireless service revenue (Consumer and Business segments)
• Wireless equipment revenue
• Broadband revenue (Fios internet and Fixed Wireless Access)
• Business wireline revenue

Income Statement Analysis

• Total operating revenue increased by 1.6% year-over-year, indicating positive growth momentum. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Adjusted EBITDA increased by 2.1% year-over-year, showing improved profitability. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Adjusted EPS increased by 1.9% year-over-year, reflecting earnings growth. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Balance Sheet Analysis

• Total debt and unsecured debt decreased compared to the previous quarter, indicating deleveraging. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Cash and cash equivalents increased significantly, improving liquidity. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Net unsecured debt to adjusted EBITDA ratio improved to 2.3x from 2.6x, showcasing balance sheet improvement. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Cash Flow Analysis

• Cash flow from operations slightly decreased year-over-year, reflecting higher cash taxes and interest expense. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Capital expenditures decreased year-over-year, contributing to improved free cash flow. (Source: VZ_4Q24_Earnings_News_Release.pdf)
• Free cash flow increased year-over-year, indicating improved cash generation. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Capital Allocation

Verizon is focused on deleveraging, as evidenced by the reduction in debt. They are also committed to returning value to shareholders through dividends, with an 18th consecutive year of dividend increases. Capital expenditures are guided to increase slightly in 2025, indicating continued investment in network and growth. Strategic transactions like the Frontier acquisition and spectrum purchases are also part of their capital allocation strategy. (Source: VZ_4Q24_Earnings_News_Release.pdf, VZ_4Q2024_Presentation.pdf)

Management Commentary

Verizon delivered strong customer growth and profitability in 2024. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Company added nearly 1 million postpaid mobile and broadband subscribers in fourth quarter, best quarterly result in more than a decade. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Industry-leading total wireless service revenue of $20.0 billion dollars in the fourth quarter. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Continued declines in Business wireline revenue. (Source: VZ_4Q24_Earnings_News_Release.pdf)

Overall Sentiment: Positive. Management expresses confidence in the company's performance and future outlook, highlighting strong customer growth and financial results, while acknowledging challenges in specific segments like Business wireline.

Recommendation

Rating: Buy

Reason for Rating: Verizon shows strong performance in key areas like wireless service revenue and customer growth. Debt reduction and improved free cash flow are positive signals. While there are challenges in the Business wireline segment, the overall momentum and positive outlook for 2025 suggest a Buy recommendation.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 1/25/2025, 3:00:15 AM