Verizon Communications Now Owns 100% of Verizon Wireless after Completing Vodafone Deal

(VZ, $46.80, down $0.47 in morning trading)

Verizon Communications Inc. (VZ) has completed its acquisition of British mobile company Vodafone Group PLC’s (VOD) 45% interest in Verizon Wireless.  Verizon issued 1.27 billion shares of stock to Vodafone shareholders today, thereby causing a price adjustment in Vodafone stock.

VOD shareholders received 0.026 shares of VZ for each share of VOD owned.  In addition, Reuters reports that Vodafone’s shares “would be consolidated … at the ratio of 6 new shares for 11 existing shares…”.

Wall Street expects VZ’s earnings per share (EPS) to grow 23%, 4%, and 5% in 2014 through 2016.  VZ expects 4% revenue growth in 2014, vs. 4.1% growth in 2013.

The dividend yield is 4.5%, which provides tremendous price support on the stock.   The 2014 PE remains low at 13.4.

The long-term debt ratio was high at 59%, prior to taking on the Verizon Wireless acquisition from Vodafone. 

The stock will likely trade between $46-$51 in the coming months.  As the price approaches $51, I will be re-assessing Wall Street’s earnings growth projections, which will inevitably be changing in light of the recent Vodafone and T-Mobile deals.  If 2015 & ’16 earnings projections don’t rise, I will recommend that shareholders sell near $51 and move on to a stock with a comparable dividend, and a higher earnings growth rate.

See my reports from January 6 and prior.

Goodfellow LLC Rating:  Hold, Public.  (02/24/13)

VZ 02-24-14

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