Are Verizon Shares Trading at a Discount?

E = Equity to Debt Ratio is Close to Zero

Verizon has a debt to equity ratio of 1.4, which is more than twice the debt to equity ratio of 0.63 at rival AT&T (NYSE:T). Their total debt of $52.8 billion with $10.3 billion total cash bests AT&T’s total debt of $63.6 billion with only $2.2 billion cash on hand.

T = Technicals on the Stock Chart are Strong

As of November 13, the stock price is 5.69 percent below its 20-day simple moving average, or SMA; 6.98 percent below the 50-day SMA; and 0.09 percent above the 200-day SMA. The Relative Strength Indicator is around 26, below the oversold threshold of 30 used by some investors but short of the 20 mark favored by more cautious investors. An RSI of 70 or 80 or above is an indication the stock is overbought and due for a fall while values between 20 and 30 or below signal a possible uptrend.

S = Support is Provided by Institutional Investors & Company Insiders

Verizon’s institutional ownership is on the light side for a Dow component at 54.2% but fares well when compared to AT&T where 57% of shares are institutionally held. Verizon’s top five holders are Vanguard Group, Capital World Investors, Capital Research Global Investors, BlackRock Institutional Trust, and Bank of New York Mellon. Insider transactions of 34.5% are relatively high, with seven major sales from Verizon corporate officers over the past year.  .

E = Earnings Are Increasing Quarter over Quarter

Verizon’s most recent quarter over quarter earnings showed a 14.43% increase, far superior to the 3.14% increase posted by AT&T.  However, neither company has shot the lights out over the past five years, with a decline of 18.83% at T and a drop of 14.7% at VZ.