Was Warren Buffett right in selling Verizon Communications after all?

Warren Buffett recently got rid of more and more Verizon Communications (WKN: 868402) shares. Why, why, why? Presumably because this stock no longer promises the best risk-reward ratio and the star investor simply sees better opportunities.

We can see this again from the current quarterly figures. Perhaps a trend setting indicator? In any case, Verizon Communications stock corrected about 7% after the numbers were released. But of course we don’t know if Warren Buffett sold because of a possible operating weakness.

4 “Inflation Proof” Stocks to Buy Today! There is no doubt that inflation is skyrocketing. Investors are worried. Money that just sits in the bank loses value every year. But where should you invest your money? Here are 4 The Motley Fool editors’ favorite stocks to invest in when inflation rises. We early recommended some of the most profitable stocks of this generation, such as Shopify (+6,878%), Tesla (+10,714%) or MercadoLibre (+10,291%). Grab these 4 stocks while you still can. Simply enter your email address below and request this free report immediately. Request the free analysis here now.

Verizon Communications: The Numbers at a Glance!

In any case, it’s certain that Verizon Communications made a mistake in a few places this past quarter. Sales increased by just 0.1% year-on-year. Net income, on the other hand, fell to $5.31 billion from $5.94 billion a year earlier. Of course, that’s not what investors wanted to see.

But operationally, there were also some construction sites. Verizon Communications executives are talking about gaining 12,000 net wireless phone subscribers in the past quarter alone. A fairly small number, possibly exhibiting some cyclicality with renewals and possible changes. But the weakness of competitor AT&T also does not bode well for the market as a whole.

Verizon Communications was also forced to lower its forecast for the current fiscal year due to the weaker operational performance. Instead of $5.40 to $5.55 for earnings per share, management now expects a value in the range of $5.10 to $5.25. Even if it doesn’t look like it, it’s still important. And could also be a reason for Warren Buffett’s disinterest.

Nevertheless, the American telecommunications group remains profitable and a dividend machine. Foolish investors should consider what price seems appropriate given the risk and the scenario of weaker operational results.

Warren Buffett doesn’t seem to be in the mood to buy

In any case, Warren Buffett doesn’t seem to be in a buying mood at Verizon Communications. But the fundamental valuation is now significantly cheaper. With a current share price of US$44.45, the P/E ratio should be 8.7 even in the worst case scenario so far. The dividend yield, on the other hand, comes to 5.75 per cent. It can be attractive.

It is true that the operational rudder must be rotated. But even with a 50% payout going forward, this dividend stock at least seems interesting. Barring further operational shocks, there could be quite a bit of value in this cheap value stock right now. But decide for yourself if it is enough for you.

Our best stock for 2022

There’s one company whose name is getting a lot of buzz from analysts at The Motley Fool these days. It’s for us THE best investment for 2022.

You could also benefit from that. To do this, you must first know everything about this unique company. So now we have one free special report prepared which introduces this company in detail.

Click here to download this report now for free.


Vincent owns shares in Verizon Communications. The Motley Fool recommends Verizon Communications.

Leave a Comment