HomeMost PopularTech StocksOpportunity in AT&T (T) or Verizon (VZ) Stock: Analysis and Market Outlook

Opportunity in AT&T (T) or Verizon (VZ) Stock: Analysis and Market Outlook

Actionable Trade Ideas

always free

In the highly competitive wireless national industry, where smaller carriers are undercutting the price plans of larger players, AT&T (T) and Verizon (VZ) have seen their stocks hover near their 52-week lows. This raises the question: Is there an opportunity for investors to buy at these levels?

Outlook & Growth Comparison

The Zacks Wireless National Industry currently ranks in the bottom 17% of all Zacks industries due to increasing competition and cautious consumer behavior. However, it’s worth monitoring the growth of the industry in comparison to AT&T and Verizon.

The Zacks subindustry is expecting strong EPS growth this year at an average of around 25%. AT&T’s earnings, however, are 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%.

Verizon’s earnings are also expected to be below the industry’s anticipated growth rate. Its earnings are forecasted to drop -9% in FY23 and be virtually flat next year at $4.72 per share. Total sales are projected to dip -2% in FY23 and then stabilize and rise over 1% in FY24 to $135.72 billion, but below the industry’s historical growth rate as well.

More Reasonable Valuations

One argument for buying AT&T or Verizon stock is their attractive valuations. AT&T and Verizon stock trade at just 5.9X and 6.5X forward earnings, respectively, a significant discount to the industry average of 10.3X and well below the S&P 500’s 20.2X. AT&T and Verizon’s stock also trade at significant discounts to their decade-long highs and medians in terms of the forward earnings multiple.

AT&T’s price-to-sales (P/S) ratio is on par with the industry average at 0.8X, while Verizon’s ratio is attractively below T-Mobile’s 2X and the S&P 500’s 3.7X at 0.9X. Both companies offer attractive valuations for investors.

Stellar Dividends

Investing in AT&T and Verizon stock can also be appealing due to their stellar dividends. Verizon has an 8.62% dividend yield, while AT&T’s yield is slightly lower at 7.68%. These yields tower over the S&P 500’s 1.48% average and are well above the Wireless National Market’s 4.73%. This is significant as there are many companies in the wireless industry that do not offer a dividend, including T-Mobile.

Bottom Line

While AT&T and Verizon currently hold a Zack Rank #3 (Hold), their long-term prospects are still attractive when considering their reasonable valuations. Investors may be rewarded for holding shares at current levels, especially with the potential for sustained dividends. However, it’s important to keep an eye on industry dynamics and competition as the landscape continues to evolve.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.