Xiaoou Zhang
Xiaoxu Yu
Overview
SIM
S&P 500
Financials
16.03%
Financials
14.99%
Health Care
12.34%
Energy
10.93%
Health Care
12.07%
Energy
9.83%
Industrials
10.16%
Info Tech
18.10%
Cons Staples
10.93%
Cons Disc
11.62%
Utilities
3.45%
Materials
3.45%
Industrials
9.99%
Cons Staples
12.59%
Cons Disc
12.28%
Telecom Svc
2.98%
SIM is underweighted by 216 basic points than S&P 500. Only stock: NIHD
Info Tech
18.14%
Cash Utilities
3.38% 3.27%
Materials
2.63%
Telecom Svc
0.82%
Sector
Telecom
Industries
Market
cap
# of
stocks in
S&P 500
Alternative
carriers
63.3 B
0
Integrate
telecom svc
1.33 T
5
Wireless
telecom svc
1.08 T
3
Major Players on the Market
Recommendations
Company
Recommendation
NII Holdings
HOLD
Verizon
HOLD
AT&T
BUY (+0.8%)
MetroPCS
BUY (+0.6%)
NII Holdings, Inc.
Company Introduction
NII Holdings is a provider of fully-integrated mobile communication
services operating in Latin America and is headquartered in Reston,
Virginia.
NII Holdings announced on April 4, 2013 that it has agreed to sell its
Peruvian operations to Empresa Nacional de Telecomunicaciones S.A.
for approximately $400 million. It was closed at $4.54 on April 4 and
soared to highest price at $6.42 and was closed at $6.33 on April 8.
NIHD
(thousands)
Operating revenues
Service and other revenues
Handset and accessory revenues
Net Sales
Consensus
FY
2014E
FY
2013E
FY
2012
FY
2011
Projected Income Statement
Operating expenses
Cost of service(exclusive of depreciation
Cost of digital handsets and accessories
Selling, general and administrative
Provision for doubtful accounts
Impairment an drestructuring charges
Depreciation & Amortization
Operating income
Other expense
Interest expense, net
Interest income
Foreign currency transaction (losses) gains,
net
Debt conversion expense
Loss on extinguishment of debt
Other expense, net
(Loss) Income before income tax provision
Income tax provision
Net (loss) income
EPS - basic
EPS - diluted
Shares outstanding - basic
Shares outstanding - diluted
FY
2010
FY
2009
FY
2008
FY
2007
FY
2006
6,796,291
354,936
7,151,227
6,068,117
322,669
6,390,786
6,150,000
5,779,159
307,304
6,086,463
6,120,000
6,403,500
331,400
6,734,900
5,347,724
253,592
5,601,316
4,153,548
244,051
4,397,599
4,048,466
220,914
4,269,380
3,184,696
111,599
3,296,295
2,279,922
91,418
2,371,340
2,038,887
1,064,808
1,820,435
968,008
1,690,464
915,120
1,789,400
855,900
1,506,019
723,115
1,225,222
623,733
1,110,927
585,391
850,934
443,760
597,262
331,714
2,717,466
858,147
6,679,309
471,918
2,428,499
818,021
6,034,962
355,824
2,324,422
220,597
330,340
728,780
6,209,723
(123,260)
2,343,100
161,900
653,100
5,803,400
931,500
1,941,789
552,980
4,723,903
877,413
1,438,463
433,304
3,720,722
676,877
1,400,642
405,120
3,502,080
767,300
1,077,893
305,029
2,677,616
618,679
780,373
202,222
1,911,571
459,769
(357,561)
39,332
(319,539)
35,149
(373,253)
34,143
(322,100)
34,200
(342,204)
28,841
(218,844)
25,586
(205,516)
68,411
(160,642)
67,429
(89,379)
51,057
(21,454)
(339,683)
(19,172)
(303,562)
(53,415)
(27,355)
(419,880)
(37,000)
(37,200)
(362,100)
52,374
(18,686)
(279,675)
104,866
(2,308)
(90,700)
(120,572)
(28,806)
(286,483)
19,008
(25,753)
(6,311)
(1,914)
(108,183)
3,557
(5,070)
(6,000)
(45,835)
132,235
(52,894)
52,262
(26,131)
(543,140)
(222,109)
569,400
(344,200)
597,738
(256,686)
586,177
(204,686)
480,817
(138,862)
510,496
(156,748)
413,934
(119,444)
79,341
26,131
(765,249)
225,200
341,052
381,491
341,955
353,748
294,490
0.46
0.46
0.15
0.15
(4.46)
(4.46)
1.32
1.30
2.03
1.99
2.30
2.27
2.05
2.02
2.12
2.02
1.91
1.67
172,200.0
172,200.0
171,800.0
171,800.0
170,601.0
172,781.0
168,160.0
175,709.0
166,042.0
174,014.0
166,927.0
175,290.0
166,749.0
184,256.0
154,085.0
184,282.0
171,499.0
171,499.0
Sales Growth
Service
Handset and accessory
11.9%
12.00%
10.00%
5.0%
5.00%
5.00%
-9.6%
-9.7%
-7.3%
20.2%
19.7%
30.7%
27.4%
28.8%
3.9%
3.0%
2.6%
10.5%
29.5%
27.1%
98.0%
39.0%
39.7%
22.1%
30.00%
300.00%
30.00%
300.00%
29.3%
297.8%
27.9%
258.3%
28.2%
285.1%
29.5%
255.6%
27.4%
265.0%
26.7%
397.6%
26.2%
362.9%
38.00%
-5.00%
0.55%
38.00%
-5.00%
0.55%
38.19%
-6.13%
0.56%
34.79%
-4.78%
0.51%
34.67%
-6.11%
0.51%
32.71%
-4.98%
0.58%
32.81%
-4.81%
1.60%
32.70%
-4.87%
2.05%
32.91%
-3.77%
2.15%
0.00%
-0.30%
0.00%
-0.30%
-0.88%
-0.45%
-0.55%
-0.55%
0.94%
-0.33%
2.38%
-0.05%
-2.82%
-0.67%
0.58%
-0.78%
-0.19%
-0.06%
0.15%
-0.21%
-0.25%
Effective Tax Rate
40.00%
50.00%
-40.89%
60.45%
42.94%
34.92%
28.88%
30.71%
28.86%
Operating Margin
EBT
6.6%
1.8%
5.6%
0.8%
-2.0%
-8.9%
13.8%
8.5%
15.7%
10.7%
15.4%
13.3%
18.0%
11.3%
18.8%
15.5%
19.4%
17.5%
858,147
12.00%
1,072,684
15.00%
818,021
12.80%
958,618
15.00%
728,780
11.97%
1,108,047
18.21%
653,100
9.70%
1,061,209
15.76%
552,980
9.87%
691,759
12.35%
433,304
9.85%
649,578
14.77%
405,120
9.49%
806,610
18.89%
305,029
9.25%
624,309
18.94%
202,222
8.53%
551,256
908,206
12.70%
296,776
4.15%
400,469
5.60%
(85,550)
-1.2%
-10.1%
811,630
12.70%
265,218
4.15%
357,884
5.60%
(149,064)
-2.3%
-46.6%
705,737
11.60%
349,704
5.75%
485,542
7.98%
188,184
3.1%
-32.1%
858,471
12.75%
277,291
4.12%
377,679
5.61%
(42,922)
-0.6%
-3.1%
788,000
14.07%
227,191
4.06%
300,030
5.36%
(100,090)
-1.8%
-6.5%
613,591
13.95%
188,476
4.29%
186,996
4.25%
(157,459)
-3.6%
-119.2%
454,769
10.65%
139,285
3.26%
136,442
3.20%
(36,990)
-0.9%
-2.9%
438,348
13.30%
107,314
3.26%
125,040
3.79%
(159,592)
-4.8%
-12.4%
298,470
12.59%
70,247
2.96%
107,687
4.54%
Cost of revenues
Cost of service (exclusive of depreciation
and amortization included below)
Cost of handset and accessory sales
% of Sales
Selling, general and administrative
Interest expense, net
Interest income
Foreign currency transaction (losses) gains,
net
Debt conversion expense
Loss on extinguishment of debt
Other expense, net
D&A
% of sales
CAPEX
% of sales
Receivables
% of sales
Inventories
% of sales
Payables
% of sales
Chg in Operating Working Capital
WC / Sales
WC / Sales / Sales Growth
NII Holdings (NIHD)
Year
(in thousands)
Analyst: Xiaoou Zhang
2012
DCF
Operating Revenues
6,086,463
% Grow th
2013E
6,390,786
5.0%
Operating Income
(123,260)
Operating Margin
Other expense
Other expense % of Sales
Taxes
Tax Rate
Net Income
355,824
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
Shares Outstanding
951,828
11,101,174
9.0%
1,037,493
7.0%
1,110,117
11,656,232
5.0%
1,165,623
12,005,919
3.0%
1,200,592
12,306,067
2.5%
1,230,607
10.0%
10.0%
(419,880)
(303,562)
(339,683)
(373,652)
(411,017)
(452,118)
(492,809)
(527,306)
(553,671)
(570,281)
(584,538)
-6.9%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
-4.8%
(222,109)
(26,131)
(52,894)
(102,263)
(181,713)
(199,884)
(217,874)
(233,125)
(244,781)
(252,124)
(258,427)
-40.9%
50.0%
40.0%
40.0%
40.0%
40.0%
40.0%
40.0%
40.0%
40.0%
40.0%
26,131
818,021
79,341
203.6%
858,147
93.3%
943,962
272,569
299,826
77.7%
1,038,358
10.0%
1,142,194
326,810
349,687
9.0%
1,244,991
7.0%
1,332,141
367,171
5.0%
1,398,748
378,186
3.0%
1,440,710
387,641
2.5%
1,476,728
12.0%
12.0%
12.0%
12.0%
12.0%
12.0%
12.0%
12.0%
12.0%
(149,064)
(85,550)
(173,060)
(190,366)
(209,402)
(205,424)
(170,958)
(128,219)
(79,239)
(67,683)
-2.3%
958,618
-1.2%
1,072,684
15.00%
15.00%
(857,529)
(113,756)
(65,581)
-86.7%
-42.3%
557,463
719,463
1,276,926
-72.47%
44%
56%
100%
(1.5)
(1.7)
7.5
7.7
45.3
48.9
3.9
4.0
6.90
7.45
7.9%
153,394
12.8%
18.21%
171,499.0
$
$
865,298
10,374,929
TERMINAL
2022E
10.0%
% Grow th
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
10.0%
2021E
10.0%
3.1%
Free Cash Flow
9,518,283
10.0%
2020E
10.0%
1,108,047
Capex % of sales
629,308
8,652,985
2019E
10.0%
188,184
% of Sales
10.0%
2018E
10.0%
12.0%
Subtract Cap Ex
471,918
7,866,350
2017E
8.0%
728,780
Plus/(minus) Changes WC
11.9%
2016E
2.5%
6.6%
-103.4%
% of Sales
7,151,227
2015E
15.00% Terminal FCF Growth =
5.6%
(765,249)
Add Depreciation/Amort
2014E
Terminal Discount Rate =
-2.0%
% Grow th
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Date: 04/15/2013
-2.2%
1,022,625
13.0%
31,829
-148.5%
-2.2%
1,038,358
-2.2%
1,142,194
12.0%
180,635
467.5%
12.0%
198,699
10.0%
-2.0%
1,244,991
-1.5%
1,332,141
12.0%
227,605
14.5%
12.0%
267,126
17.4%
-1.1%
1,398,748
12.0%
305,250
14.3%
-0.7%
1,440,710
12.0%
339,919
11.4%
Terminal Value
Free Cash Yield
14.9
16.1
3.4
3.5
Current Price
Implied equity value/share
Upside/(Downside) to DCF
$
$
6.90
7.45
7.9%
-0.6%
1,476,728
12.0%
354,955
4.4%
2,910,628
12.20%
Terminal P/E
7.5
Terminal EV/EBITDA
2.3
Sensitivity Analysis
NIHD Stock Price Sensitivity Analysis
Discount Rate
Growth Rate
$
-
16.00%
15.00%
14.00%
13.00%
12.00%
11.00%
10.00%
4.00%
$7.09
$8.09
$9.30
$10.80
$12.70
$15.17
$18.51
3.50%
$6.91
$7.85
$9.00
$10.40
$12.15
$14.40
$17.38
3.00%
$6.74
$7.64
$8.72
$10.04
$11.67
$13.73
$16.42
2.50%
$6.59
$7.45
$8.47
$9.71
$11.23
$13.13
$15.58
2.00%
$6.44
$7.26
$8.24
$9.41
$10.84
$12.61
$14.85
1.50%
1.00%
$6.31
$6.18
$7.10
$6.94
$8.03
$7.83
$9.14
$8.89
$10.48
$10.16
$12.13
$11.71
$14.21
$13.63
Multiple Valuation
High
Low
Median
Current
1-year
Target
Multiple
P/Forward E
73.6
6.7
17.3
N/A
N/A
N/A
N/A
P/S
6.2
0.1
1.8
0.2
0.25
$35.00
$8.75
P/B
16.8
0.3
3.8
0.4
0.6
$13.50
$8.10
20.86
0.37
5.44
1.55
1.5
$5.50
$8.25
32.8
1.7
9.1
4.5
N/A
N/A
N/A
Absolute Valuation
P/EBITDA
P/CF
Average: $8.37
Target Price: $8.00
Target E, S, B, 1-year Target
etc/Share
Price
Crown Castle International Corp. (CCI)
High
Low
Median
Current
1-year
Target
Multiple
386.5
56.8
93.5
160.2
130
$0.60
$78.00
P/S
11.6
1.3
6.7
8.8
8.8
$8.00
$70.40
P/B
11.2
0.5
4.1
7.3
7.8
$10.00
$78.00
P/EBITDA
311.43
3.47
15.26
12.8
14
$5.50
$77.00
P/CF
315.5
7.2
22.7
24.2
24
$3.40
$81.60
Absolute Valuation
P/Forward E
Average: $75.13
Current: 73.21
Target E, S, B, 1-year Target
etc/Share
Price
MetroPCS Communications, Inc. (PCS)
Average: $13.10
Current:11.05
Sprint Nextel Corp. (S)
High
Low
Median
Current
1-year
Target
Multiple
175.9
7.7
15.5
NM
N/A
($1.00)
N/A
P/S
1.6
0.1
0.6
0.5
0.6
$12.00
$7.20
P/B
3.1
0.3
1.1
2.2
2
$3.00
$6.00
P/EBITDA
9.55
0.92
3.65
4.04
4
$1.54
$6.16
P/CF
6.3
0.6
3.4
6.1
6.2
$1.00
$6.20
Absolute Valuation
P/Forward E
Average: $6.45
Current: $7.06
Target E, S, B, 1-year Target
etc/Share
Price
Verizon-Company Overview
Verizon Communications Inc.
(Verizon) is a holding company.
The Company is a provider of
communications, information and
entertainment
products
and
services to consumers, businesses
and governmental agencies. It
operates in two primary segments:
Verizon Wireless and Wireline.
Verizon-Segment Overview
The wireless business provides voice and data services
and equipment sales across the United States. Verizon
owns a controlling 55% interest in Verizon Wireless and
Vodafone owns the remaining 45%.
The Wireline segment provides communications
products and services including local exchange and
long distance voice service, broadband video and data,
IP network services, network access and other services
to consumers, small businesses and carriers in the
United States, as well as to businesses and
government customers both in the United States and
in over 150 other countries around the world.
Segment Analysis-Income Statement Discussion
Connection and Operating Trends
Operating Costs and Expenses
Capital Expenditures
Verizon
(millions)
Operating Revenues $
FY
2015E
133,548
Total Segment Operating Income
25,416
Equity in earnings of unconsolidated businesses
375
Other income and (expense), net
(13)
Interest Expense
(3,339)
Income Before Provision For Income Taxes (EBT)22,439
Provision for Income Taxes
(4,039)
Net income
18,400
FY
2014E
127,383
FY
2013E
121,920
FY
2012
115,846
FY
2011
110,875
FY
2010
106,565
FY
2009
107,808
FY
2008
97,354
FY
2007
93,469
23,487
357
(13)
(3,185)
20,647
(3,716)
16,930
21,536
340
(12)
(3,048)
18,816
(3,387)
15,429
21,828
324
(1,016)
(2,571)
18,565
(2,460)
16,105
19,486
444
(14)
(2,827)
17,089
(285)
16,804
19,492
508
54
(2,523)
17,531
(2,467)
15,064
18,211
553
91
(3,102)
15,753
(1,919)
13,834
15,975
567
282
(1,819)
15,005
(3,331)
11,674
15,657
585
211
(1,829)
14,624
(3,982)
10,653
Net income attributable to noncontrolling interest（ Vodaphone)
10,148
Net income attributable to Verizon
8,252
Net Income
8,252
9,361
7,569
7,569
8,644
6,785
6,785
9,682
6,423
6,423
7,794
2,404
9,010
7,668
2,549
7,396
6,707
4,894
7,127
6,155
6,428
5,519
5,053
5,521
5,600
Basic Earnings Per Common Share
Net Income attributable to Verizon
Weighted-average shares outstanding (in millions)
2.89
2,853
2.65
2,853
2.38
2,853
2.25
2,853
0.85
2,833
0.90
2,830
1.72
2,841
2.26
2,849
1.91
2,898
2.89
2,853
2.65
2,853
2.55
2.38
2,853
2.25
2.25
2,853
0.85
2,839
0.90
2,833
1.72
2,841
2.26
2,850
1.90
2,902
Diluted Earnings Per Common Share
Net Income attributale to verizon
Weighted-average shares outstanding (in millions)
Consensus
Sales Growth
Interest Expense
Other income and (expense), net
Effective Tax Rate
4.8%
4.5%
5.2%
4.5%
4.0%
-1.2%
10.7%
4.2%
6.0%
2.50%
0.01%
2.50%
0.01%
2.50%
0.01%
2.22%
0.88%
2.55%
0.01%
2.37%
-0.05%
2.88%
-0.08%
1.87%
-0.29%
1.96%
-0.23%
18.00%
18.00%
18.00%
13.25%
1.67%
14.07%
12.18%
22.20%
27.23%
5.00%
5.00%
5.00%
Growth Rate of Equity in earnings of unconsolidated businesses
5.00%
D&A
% of sales
CAPEX
% of sales
18,697
14.00%
16,693
12.50%
17,834
14.00%
16,560
13.00%
17,069
14.00%
16,459
13.50%
16,460
14.21%
(16,175)
13.96%
16,496
14.88%
(16,244)
14.65%
16,405
15.39%
(16,458)
15.44%
16,534
15.34%
(16,872)
15.65%
14,565
14.96%
(17,238)
17.71%
14,377
15.38%
(17,538)
18.76%
Receivables
% of sales
Inventories
% of sales
Payables
% of sales
Operational Working Capital Chg
WC / Sales
WC / Sales / Sales Growth
14,423
10.80%
1,335
1.00%
19,231
14.40%
160
0.1%
2.5%
13,757
10.80%
1,274
1.00%
18,343
14.40%
142
0.1%
2.5%
13,167
10.80%
1,219
1.00%
17,556
14.40%
639
0.5%
10.0%
12,576
10.86%
1,075
0.93%
16,182
13.97%
558
0.5%
10.7%
11,776
10.62%
940
0.85%
14,689
13.25%
(817)
-0.7%
-18.2%
11,781
11.06%
1,131
1.06%
15,702
14.73%
2,429
2.3%
-197.7%
12,573
11.66%
2,289
2.12%
15,223
14.12%
342
0.3%
3.0%
11,703
12.02%
2,092
2.15%
13,814
14.19%
(978)
-1.0%
-24.2%
11,736
12.56%
1,729
1.85%
14,462
15.47%
(918)
-1.0%
-16.4%
DCF Analysis
Terminal FCF Growth Rate-1.5%
In the coming five years, telecommunication sector will keep its
growing tendency.
Terminal Discount Rate-7.5%
Telecommunication sector (Verizon) belongs to defensive business.
Valuation-$44.2/Share
Verizon
Analyst: Xiaoxu Yu
Date: 2/12/2013
Year
Terminal Discount Rate =
Terminal FCF Growth =
2013E
Revenue
2014E
2015E
121,920
127,383
4.48%
133,548
4.84%
21,536
23,487
25,416
% Grow th
Operating Income
Operating Margin
Equity in earnings of
unconsolidated businesses
Equiy in earnings % of Sales
Other income and (expense), net
Other income (expense) % of Sales
Interest Expense
Interest % of Sales
Income Before Provision For
Income Taxes (EBT)
Taxes
Tax Rate
Net income attributable to
noncontrolling
interest（ Vodaphone)
Net Income
Subtract Cap Ex
Current Price
Implied equity value/share
Upside/(Downside) to DCF
Debt
Cash
Cash/share
Total Assets
Debt/Assets
Working Capital % of Growth
25,722
26,751
27,821
23,725
24,733
177,081
1.50%
28,795
29,659
30,104
17.0%
17.0%
340
357
375
479
479
479
479
479
479
479
479
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
0.3%
(12)
(13)
(13)
(13)
(13)
(13)
(13)
(13)
(13)
(13)
(13)
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
(3,048)
(3,185)
(3,339)
(3,489)
(3,637)
(3,783)
(3,934)
(4,091)
(4,235)
(4,362)
(4,427)
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
18,816
(3,387)
20,647
(3,716)
22,439
(4,039)
20,702
(3,726)
21,562
(3,881)
22,405
(4,033)
23,283
(4,191)
24,196
(4,355)
25,026
(4,505)
25,763
(4,637)
26,143
(4,706)
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
9,361
7,569
17,834
10,148
8,252
9.0%
18,697
10,604
6,371
-22.8%
19,538
11,055
6,625
4.0%
20,368
11,497
6,875
3.8%
21,183
11,957
7,135
3.8%
22,030
12,436
7,405
12,871
7,651
3.8%
22,912
3.3%
23,714
13,257
7,869
2.9%
24,425
13,456
7,981
1.4%
24,791
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
14.0%
(639)
(142)
(160)
(94)
(98)
(102)
(106)
(110)
(114)
(118)
(120)
0.5%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
61,338
64,735
126,073
5.84%
20.8
18.6
4.8
4.4
16,560
13%
8,462
16,693
13%
9,705
14.7%
18,142
13%
7,397
-23.8%
18,913
13%
7,695
4.0%
19,670
13%
7,988
3.8%
20,457
13%
8,292
3.8%
49%
51%
100%
22,020
13%
8,608
13%
8,896
3.8%
3.3%
22,680
13%
9,152
2.9%
Free Cash Yield
18.6
16.7
4.5
4.1
17.1 Concensus
15.3
15
4.2
3.8
5.5
49.43
44.19
-10.6%
47,618
3,093
1.08
225,222
21.1%
-1.50%
21,275
Terminal Value
2,853
$
$
169,383 174,464
3.50%
3.00%
17.0%
2.7%
Shares Outstanding
163,655
4.00%
17.0%
8,239
Current P/E
Projected P/E
Current EV/EBITDA
Projected EV/EBITDA
157,360
4.00%
17.0%
% Grow th
NPV of Cash Flows
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
151,308
4.00%
TERMINAL
2023E
17.0%
14%
Free Cash Flow
139,557 145,488
4.50%
4.25%
2022E
2021E
17.0%
16,459
Capex % of sales
2020E
17.0%
17,069
% of Sales
2019E
19.0%
11.6%
Plus/(minus) Changes WC
2018E
18.4%
% Grow th
% of Sales
2017E
17.7%
8,644
6,785
Add Depreciation/Amort
2016E
7.50%
1.5%
$44.2/Share
0.1%
24,791
14%
7,887
-13.8%
133,420
5.91%
Terminal P/E
16.7
Terminal EV/EBITDA
3.2
Sensitivity Analysis
$ 44.19
0.25%
0.50%
0.75%
1.00%
Terminal
1.25%
FCF
1.50%
Growth
1.75%
2.00%
2.25%
2.50%
2.75%
5.5%
54.31111
55.99798
57.86243
59.93406
62.24945
64.85427
67.80644
71.18037
75.0734
79.6153
84.98304
6.0%
49.76274
51.11059
52.58683
54.21071
56.00555
57.99983
60.22877
62.73634
65.57829
68.82625
72.57394
6.5%
45.92835
47.02275
48.21234
49.5101
50.93147
52.49499
54.22313
56.1433
58.28939
60.70378
63.44011
Terminal Discount Rate
7.0%
7.5%
8.0%
42.65026 39.81425 37.3355
43.55101 40.56427 37.96632
44.52384 41.36986 38.64066
45.57776 42.23744 39.36318
46.72334 43.17444 40.13924
47.97308 44.18955 40.97501
49.34187 45.29294 41.87767
50.84755 46.49666 42.85556
52.51176 47.81504 43.9185
54.3609 49.26529 45.0781
56.42761 50.86821 46.34816
8.5%
35.1497
35.68495
36.25474
36.86254
37.51227
38.20842
38.95616
39.76144
40.63115
41.57336
42.59752
9.0%
33.20719
33.66488
34.15033
34.66613
35.21523
35.80094
36.42707
37.09793
37.81851
38.59453
39.43265
9.5%
31.46901
31.8631
32.27971
32.72085
33.18874
33.68589
34.21513
34.77966
35.38314
36.02974
36.72426
Multiple Valuation
Absolute
Valuation
High
Low
Median
Current
Target
Multiple
Target E, S, B,
etc/Share
Target Price
A.
P/Forward E
B.
17.9
C.
10.4
D.
13.4
E.
17.9
F.
15.2
G.
2.99
H.
$45.45
P/S
1.5
0.7
1.1
1.2
1.1
38.60
$42.46
P/B
4.2
1.6
2.4
3.8
3.5
13.42
$46.97
P/EBITDA
6.87
2.80
3.83
6.87
4.9
9.20
$45.08
P/CF
6.2
3.1
4.4
6.2
4.9
9.45
$46.31
Target Price
Absolute Valuation
Your Target Price
Weight
DCF
$44.19
60%
P/Forward E
$45.45
5%
P/S
$42.46
10%
P/B
$46.97
5%
P/EBITDA
$45.08
15%
P/CF
$46.31
5%
Target Price
$44.5
Current Price
$49.43
Potential Downside
-10.06%
Verizon Stock Price Trend
AT&T- Company Overview
AT&T is a provider of telecommunications
services in the United States and
worldwide. Services offered include
wireless communications, local exchange
services and long-distance services. AT&T
operates in four segments: Wireless,
Wireline, Advertising Solutions and Other.
Multiple Valuation
AT&T
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
1.1
1.2
1.3
1.9
1.5
0.78
0.84
0.7
1.1
0.9
0.95
0.95
0.9
1.3
1.1
0.90
0.93
0.9
1.1
1.1
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
1.2
1.2
1.0
2.2
0.9
0.52
0.68
0.6
1.0
0.4
0.92
0.90
0.7
1.3
0.6
1.1
1.0
0.9
1.1
0.6
Multiple Valuation- Continued
Absolute
Valuation
High
Low
Median
Current
Target
Multiple
Target E, S, B,
etc/Share
Target Price
A.
B.
C.
D.
E.
F.
G.
H.
P/Forward E
18.8
8.5
14.1
16.6
15.2
2.5
$38.0
P/S
3.4
1.2
1.8
1.7
1.7
26.4
$44.9
P/B
2.6
1.4
1.9
2.2
2.0
16.9
$33.8
P/EBITDA
9.46
3.28
4.78
5.37
5.2
8.3
$43.2
P/CF
9.8
3.9
6.2
6.8
6.4
5.6
$35.8
Target Price
Absolute Valuation
Target Price
Weight
P/Forward E
$38.0
10%
P/S
$44.9
25%
P/B
$33.8
10%
P/EBITDA
$43.2
25%
P/CF
$35.8
20%
Target Price
$35.365
Current Price
$37.95
Potential Downside
-6.8%
AT&T Verizon
VZ
T
2012 Net Income
$875 M
$7.26 B
Market Capitalization
$131 B
$198 B
P/E
149
28.46
Beta
0.35
0.38
Dividend Yield
4.50%
5.07%
Share Buy-Back Amount
100 M
600 M
Cities with 4G LTE
476
135
Price/Book
3.94
2.13
Price/Sales
1.2
1.6
Price/Cash Flow
6.1
6.2
Price/EBITDA
6.85
5.23
Profit Margin
0.76%
5.70%
Return on Equity
12.32%
7.60%
Recommendation
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Q&A