Question

What are the risks associated with Verizon Stock currently? I will rate 5 stars. Thank you

Answer 1

The risks associated with Verizon stock currently are:

· There is a clear lack of growth driver for Verizon stock. The CAGR (compounded annual growth rate) of the company’s revenues have grown by a meagre 3% over the last 5 years and there is the risk that if the sales growth further fall in future then this will bring down the stock from its present levels.

· The scope of price hikes and switching is limited and this gives rise to the risk of headwinds being present for the business in the form of high competition on one hand and limited scope for billing hike on the other hand.

· North America mobile carrier service market is dried up and this gives rise to a big risk for the Verizon stock as it has no opportunity to enhance its top-line. As such the scope for alpha generation is very limited.

· High fixed costs of Verizon will likely increase in future and this will further squeeze its margins and reduce its bottom line (i.e. profitability). This is a very big risk associated with the stock.