Explaining Verizon’s 12% Drop

Verizon Communications (NYSE:VZ) has been in a tight spot as of late. 

This past year, its management predicted rising sales, customer counts, and even profits. Sadly, the company ended 2021 with an 11.8% decrease instead.

All this begged the question, what happened?

Verizon Carries a Lackluster Performance and Lots of Debt

Overall, Verizon’s quarterly earnings failed to live out their expectations, which inspired many investors to cut their losses and sell their Verizon stock.

At the same time, it was reported that Verizon carried over $143 billion in debt. Since the company had to make up for this amount, 2021 didn’t see much self-investment opportunity or any kind of expansion.

In other words, Verizon pretty much stayed at the same place it already was. Having said all this, what can we expect moving forward?

Looking Over Their Performance

Regardless of the situation, Verizon has grown each year at a steady rate. 

Its revenue grew by 6.5% this time around, and its net income grew by 31%. Plus, the amount of postpaid wireless customers increased by 24%. While not anywhere near their projected amounts, these are still significant figures.

Not to mention, it still pays out a dividend of $0.64 per share.

In essence, we need to remember that Verizon remains a behemoth at all times, and even these shortcomings aren’t enough to bring the entire company down. With that in mind, it is to be expected that a “compensatory” growth will come at a later point.

Just don’t expect constant fast growth anymore, which was the main issue behind these recent disappointments. For a company as old as Verizon, those days are long gone. From this point forward, investors should expect decent, well-distributed growth spurs now and then. 

Currently valued at less than 20 times its produced free cash flow, we believe that Verizon remains a stock worth picking up.