Here is one of the few bull cases for Verizon and AT&T recently published. As always due your own DD. Also please keep in mind that both report earnings next week. $VZ reports on 7/25 and $T reports on 7/26. It might be prudent to wait until after earnings before making a buy decision.
Highlights if you reach a paywall.
AT&T
The selloff in AT&T shares appears overdone. With expected adjusted EPS of $2.40 for 2023, AT&T stock now trades for a P/E ratio of 6.2. AT&T has traded at an average price-to-earnings ratio of 11.2 over the last decade. We view AT&T as undervalued, with a fair value P/E of 10. As a result, estimated returns for AT&T of 18% per year, based on returns from an expanding valuation multiple, EPS growth, and dividends.
Verizon
We view Verizon as a strong dividend stock. In September 2022, Verizon announced that it was increasing its quarterly dividend 2% to $0.6525. The company has a dividend growth streak of 18 consecutive years.
Based off of the current share price and the midpoint of earnings guidance for 2023, Verizon has a forward P/E of 7.2. We reaffirm our target P/E of 11, leaving potential for significant returns from an expanding multiple. In addition to EPS growth and dividends, we estimate total returns at 16.7% per year over the next five years.
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