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Is There Opportunity in AT&T (T) or Verizon (VZ) Stock Near 52-week Lows?
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Increasing competition among what seems like an abundance of national wireless carriers and cautious consumer shopping behavior has the Zacks Wireless National Industry currently in the bottom 17% of over 250 Zacks industries.
With that being said, among what is now an -11% YTD drop (total return including dividends) for the Zacks Wireless National Industry, AT&T (T - Free Report) and Verizon (VZ - Free Report) have hovered near their 52-week lows and investors may be wondering if there is opportunity here.
Image Source: Zacks Investment Research
Outlook & Growth Comparison
With the number of smaller and privately-owned phone carriers consistently emerging and seemingly undercutting the price plan cost of larger carriers, it may be wise to monitor the broader growth of the Zacks Wireless National Industry in comparison with AT&T and Verizon.
Image Source: Zacks Investment Research
In this regard, the Zacks subindustry is actually expecting strong EPS growth this year at an average of around 25%. However, AT&T’s earnings are now forecasted to dip -6% in fiscal 2023 although FY24 EPS is expected to stabilize and rise 3% to $2.50 per share.
On the top line, AT&T’s sales are projected to decline -5% in FY23 but rebound and rise over 1% in FY24 to $123.64 billion although this would still be below the industry’s historical growth rate of 2%.
Image Source: Zacks Investment Research
Turning to Verizon, its FY23 earnings are also expected to be below the anticipated growth rate of the industry. Verizon’s earnings are forecasted to drop -9% this year and be virtually flat next year at $4.72 per share.
Total sales are forecasted to dip -2% in FY23 and then stabilize and rise over 1% in FY24 to $135.72 billion but below the Wireless National Industry’s historical growth rate as well.
Image Source: Zacks Investment Research
More Reasonable Valuations
One argument for buying AT&T or Verizon stock is that at current levels, their valuations are very reasonable. AT&T and Verizon stock trade at just 5.9X and 6.5X forward earnings respectively. This is a notable discount to the industry average of 10.3X and well below the S&P 500’s 20.2X.
Furthermore, this is also below what may be considered the industry leader in T-Mobile’s (TMUS - Free Report) 19.3X. Plus, AT&T and Verizon’s stock trade at significant discounts to their decade-long highs and medians regarding the forward earnings multiple.
Image Source: Zacks Investment Research
Attractively, the price-to-sales multiple of both companies reflects the same discount for investors with AT&T and Verizon's P/S ratios nicely beneath the optimum level of less than 2X. To that point, AT&T’s 0.8X sales is on par with the industry average and while Verizon’s 0.9X is just above this level it is attractively below T-Mobile’s 2X and the S&P 500’s 3.7X.
Image Source: Zacks Investment Research
Stellar Dividends
Stellar dividends could be another deciding factor for investing in AT&T and Verizon stock right now especially if they can sustain them. This could also help turn around the total return performance of both stocks with Verizon having an 8.62% dividend yield that slightly tops AT&T’s 7.68%.
Their yields tower over the S&P 500’s 1.48% average and are well above the Wireless National Market’s 4.73% in an industry where there are still many companies that don’t offer a payout including T-Mobile.
Image Source: Zacks Investment Research
Bottom Line
At the moment, AT&T and Verizon's stock both land a Zack Rank #3 (Hold). Despite the short-term weakness expected for these companies and the broader Zacks Wireless National Industry, their long-term prospects are still attractive considering their very reasonable valutions and investors may be rewarded for holding shares at current levels.
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Is There Opportunity in AT&T (T) or Verizon (VZ) Stock Near 52-week Lows?
Increasing competition among what seems like an abundance of national wireless carriers and cautious consumer shopping behavior has the Zacks Wireless National Industry currently in the bottom 17% of over 250 Zacks industries.
With that being said, among what is now an -11% YTD drop (total return including dividends) for the Zacks Wireless National Industry, AT&T (T - Free Report) and Verizon (VZ - Free Report) have hovered near their 52-week lows and investors may be wondering if there is opportunity here.
Image Source: Zacks Investment Research
Outlook & Growth Comparison
With the number of smaller and privately-owned phone carriers consistently emerging and seemingly undercutting the price plan cost of larger carriers, it may be wise to monitor the broader growth of the Zacks Wireless National Industry in comparison with AT&T and Verizon.
Image Source: Zacks Investment Research
In this regard, the Zacks subindustry is actually expecting strong EPS growth this year at an average of around 25%. However, AT&T’s earnings are now forecasted to dip -6% in fiscal 2023 although FY24 EPS is expected to stabilize and rise 3% to $2.50 per share.
On the top line, AT&T’s sales are projected to decline -5% in FY23 but rebound and rise over 1% in FY24 to $123.64 billion although this would still be below the industry’s historical growth rate of 2%.
Image Source: Zacks Investment Research
Turning to Verizon, its FY23 earnings are also expected to be below the anticipated growth rate of the industry. Verizon’s earnings are forecasted to drop -9% this year and be virtually flat next year at $4.72 per share.
Total sales are forecasted to dip -2% in FY23 and then stabilize and rise over 1% in FY24 to $135.72 billion but below the Wireless National Industry’s historical growth rate as well.
Image Source: Zacks Investment Research
More Reasonable Valuations
One argument for buying AT&T or Verizon stock is that at current levels, their valuations are very reasonable. AT&T and Verizon stock trade at just 5.9X and 6.5X forward earnings respectively. This is a notable discount to the industry average of 10.3X and well below the S&P 500’s 20.2X.
Furthermore, this is also below what may be considered the industry leader in T-Mobile’s (TMUS - Free Report) 19.3X. Plus, AT&T and Verizon’s stock trade at significant discounts to their decade-long highs and medians regarding the forward earnings multiple.
Image Source: Zacks Investment Research
Attractively, the price-to-sales multiple of both companies reflects the same discount for investors with AT&T and Verizon's P/S ratios nicely beneath the optimum level of less than 2X. To that point, AT&T’s 0.8X sales is on par with the industry average and while Verizon’s 0.9X is just above this level it is attractively below T-Mobile’s 2X and the S&P 500’s 3.7X.
Image Source: Zacks Investment Research
Stellar Dividends
Stellar dividends could be another deciding factor for investing in AT&T and Verizon stock right now especially if they can sustain them. This could also help turn around the total return performance of both stocks with Verizon having an 8.62% dividend yield that slightly tops AT&T’s 7.68%.
Their yields tower over the S&P 500’s 1.48% average and are well above the Wireless National Market’s 4.73% in an industry where there are still many companies that don’t offer a payout including T-Mobile.
Image Source: Zacks Investment Research
Bottom Line
At the moment, AT&T and Verizon's stock both land a Zack Rank #3 (Hold). Despite the short-term weakness expected for these companies and the broader Zacks Wireless National Industry, their long-term prospects are still attractive considering their very reasonable valutions and investors may be rewarded for holding shares at current levels.