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Linked here is a detailed quantitative analysis of Verizon Communications Inc. (VZ). Provided below are some highlights from the analysis.

Company Description

Verizon Communications Inc. is the largest U.S. wireless carrier. The company also offers wireline and broadband services primarily in the northeastern U.S.

Fair Value

When calculating fair value, I consider the NPV MMA Differential Fair Value along with the following four calculations of fair value. See page 2 of the linked PDF for a more detailed description.

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

Verizon stock has recently been trading at a discount to only the first point above. Since Verizon's tangible book value is not meaningful, a Graham number cannot be calculated. When also considering the NPV MMA Differential, the stock has been trading at a 16.7% premium to its calculated fair value of $35.33. Verizon did not earn any Stars in this section.

Dividend Analytical Data

In this section, there are three possible Stars and three key metrics to take a look at. See page 2 of the linked PDF for a more detailed description of each.

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling four-year Div. > 15%

Verizon's stock earned one Star in this section for point three above. Verizon also earned a Star for having an acceptable score in at least two of the four key metrics measured. The company has paid a cash dividend to shareholders every year since 1984, and it has increased its dividend payments for 20 consecutive years.

Dividend Income vs. MMA

Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section. See page 2 of the linked PDF for a more detailed description.

1. NPV MMA Diff.
2. Years to > MMA

The NPV MMA Diff. of the $1,251 is below the $1,500 target I look for in a stock that has increased dividends as long as Verizon has. The stock's recent yield of 6.45% exceeds the 3.75% estimated 20-year average MMA rate.

Peers

The company’s peer group includes AT&T Inc. (T), with a 5.6% yield, and Lumen Technologies, Inc. (LUMN), with a 0.0% yield.

Conclusion

Verizon did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section, and did not earn any Stars in the Dividend Income vs. MMA section, all for a total of one Star. This quantitatively ranks Verizon stock as a 1-Star 'Very Weak' stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $38.52 before Verizon's NPV MMA Differential decreased to the $1,500 minimum that I look for in a stock with 20 years of consecutive dividend increases. At that price, the stock would yield 6.9%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,500 NPV MMA Differential, the calculated rate is 2.1%. This dividend growth rate is higher than the 1.4% used in this analysis, thus providing no margin of safety. Verizon has a risk rating of 2.00, which classifies it as a Medium risk stock.

For many years, Verizon has enjoyed a dominant market share despite premium pricing compared to its major rivals. The company has felt pressure as its competitors began to compete more on price. The company enjoys a perception of network quality and pricing power over its suppliers. The stock has been trading at a premium to my calculated fair value of $35.33. Its valuation and dividend metrics have kept me from adding to my position at this time.

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