Verizon Is Headed For Perpetual Debt Unless The Dividend Is Cut (Rating Upgrade) (NYSE:VZ)

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Day 2 - GSMA Mobile World Congress 2019

David Ramos

Thesis

In my previous analysis of Verizon Communications, Inc. (NYSE:VZ), I assigned a “sell” rating despite my models indicating a fair price of $40.4. This rating was primarily influenced by concerns related to the company’s substantial debt. In this follow-up

Revenue Net Income Plus Taxes Plus D&A Plus Interest
2024 $135,400.0 $19,254.78 $24,799.86 $39,730.11 $45,312.90
2025 $135,995.8 $19,633.15 $25,287.20 $40,283.13 $45,890.49
2026 $139,910.0 $20,473.97 $26,370.16 $41,797.71 $47,566.46
2027 $142,500.0 $20,978.46 $27,019.94 $42,733.08 $48,608.62
2028 $140,360.0 $20,995.24 $27,041.55 $42,518.72 $48,306.03
2029 $141,760.0 $21,012.04 $27,063.19 $42,694.73 $48,539.76
^Final EBITA^

TABLE OF ASSUMPTIONS
(Current data)
Assumptions Part 1
Equity Value 93,799.00
Debt Value 178,393.00
Cost of Debt 3.10%
Tax Rate 28.80%
10y Treasury 3.93%
Beta 0.44
Market Return 10.50%
Cost of Equity 6.82%
Assumptions Part 2
CapEx 18,767.00
Capex Margin 14.01%
Net Income 12,095.00
Interest 5,524.00
Tax 4,892.00
D&A 14,773.00
Ebitda 37,284.00
D&A Margin 11.03%
Interest Expense Margin 4.12%
Revenue 133,974.0

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