Is Verizon Communications a Buy?
Verizon Communications Incorporation is a telecommunications company that provides hardware products to its customers. It provides paid plans for calling and data for wireless devices such as phones and smartwatches. It also provides fixed internet and other communication solutions to both individual and commercial customers.
Why You Should?
- The COVID-19 Pandemic has caused a spike in demand for communication products. Verizon has greatly benefited from this parabolic rise in demand as its consumers look for increased connectivity options during these tough times. This will positively benefit the company in the future.
- Verizon has continuously innovated its products. The latest example is providing 5G Broadband to its consumers across the country. As it rapidly expands these services, the company will see a spike in demand for consumers looking to benefit off faster data speeds. This will also help the company grow and retain customers.
- Verizon is a fairly old telecom company as it was founded in 1983. The company had had to go through restructuring to be more efficient and to better suit the needs of its customers over the past years. However, that restructuring is starting to pay off once again. The company has seen a return to rising profits.
- Verizon is the largest telecommunication company in the United States. This will benefit its future product launches as it has such a wide reach across the United States consumer base.
- Verizon has seen rising revenues and profits over the past couple of financial years. This has benefited the company as it can further build a stronger balance sheet which will help its future expansion and growth. This can be seen in the graph below as the company reported low profits in the financial year of 2017. However, in the financial year of 2019, the company reported revenues of around 131.9 billion and profits of around 19.3 billion. Both of these metrics are higher than the financial year of 2018 when the company reported revenues of around 130.9 billion and profits of around 15.5 billion.
Why You Should Not?
- Verizon faces tough competition from several other communication companies across the United States. Some companies include AT&T, T-Mobile, Comcast, and several others. These companies also have a wide range of customer bases. These firms might negatively impact Verizon’s long-term growth.
- Though the pandemic has benefited Verizon, it has also negatively impacted some of its businesses. Or example, Verizon lost 68,000 paying subscribers for its communication services due to the lockdown as its consumers could no longer afford the bills of non-essential subscriptions.
In my opinion, I think that Verizon is a great long-term investment due to the strength in its business models. The COVID-19 Pandemic and the end of a restructuring has benefited the company. Further innovation in its products will help the company into the future of telecommunication. However, competition and the pandemic might hurt it in the future.