Verizon Communications Inc. (VZ) Discounted Future Market Cap

Verizon Communications Inc.

VZ (NYSE)

(%)

Valuation
Verizon Communications Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	44.29 USD
Estimated net income	19.71 Bil. USD
Estimated market capitalization	243.5 Bil. USD
Market capitalization discounted to present	187.3 Bil. USD
Shares Outstanding	4.23 Bil.
Earnings Per Share (EPS)	4.06 USD
Market Price	50.14 USD
Price to Earnings (PE) Ratio	12.35

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-12-31", "y": 125980000000}, {"l": "2017", "x": "2017-12-31", "y": 126034000000}, {"l": "2018", "x": "2018-12-31", "y": 130863000000}, {"l": "2019", "x": "2019-12-31", "y": 131868000000}, {"l": "2020", "x": "2020-12-31", "y": 128292000000}, {"l": "2021", "x": "2021-12-31", "y": 133613000000}, {"l": "2022", "x": "2022-12-31", "y": 136835000000}, {"l": "2023", "x": "2023-12-31", "y": 133974000000}, {"l": "2024", "x": "2024-12-31", "y": 134788000000}, {"l": "2025", "x": "2025-12-31", "y": 138191000000}, {"l": "2026", "x": "2026-12-31", "y": 138850171070, "oy": 138850171070, "e": true, "d": 2026, "g": 0.477, "og": 0.477}, {"l": "2027", "x": "2027-12-31", "y": 139512486386, "oy": 139512486386, "e": true, "d": 2027, "g": 0.477, "og": 0.477}, {"l": "2028", "x": "2028-12-31", "y": 140177960946, "oy": 140177960946, "e": true, "d": 2028, "g": 0.477, "og": 0.477}, {"l": "2029", "x": "2029-12-31", "y": 140846609819, "oy": 140846609819, "e": true, "d": 2029, "g": 0.477, "og": 0.477}, {"l": "2030", "x": "2030-12-31", "y": 141518448148, "oy": 141518448148, "e": true, "d": 2030, "g": 0.477, "og": 0.477}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-12-31", "y": 13127000000}, {"l": "2017", "x": "2017-12-31", "y": 30101000000}, {"l": "2018", "x": "2018-12-31", "y": 15528000000}, {"l": "2019", "x": "2019-12-31", "y": 19265000000}, {"l": "2020", "x": "2020-12-31", "y": 17801000000}, {"l": "2021", "x": "2021-12-31", "y": 22065000000}, {"l": "2022", "x": "2022-12-31", "y": 21256000000}, {"l": "2023", "x": "2023-12-31", "y": 11614000000}, {"l": "2024", "x": "2024-12-31", "y": 17506000000}, {"l": "2025", "x": "2025-12-31", "y": 17174000000}, {"l": "2026", "x": "2026-12-31", "y": 19341828830, "oy": 19341828830, "e": true, "d": 2026, "g": 12.62, "og": 12.62}, {"l": "2027", "x": "2027-12-31", "y": 19434089353, "oy": 19434089353, "e": true, "d": 2027, "g": 0.477, "og": 0.477}, {"l": "2028", "x": "2028-12-31", "y": 19526789959, "oy": 19526789959, "e": true, "d": 2028, "g": 0.477, "og": 0.477}, {"l": "2029", "x": "2029-12-31", "y": 19619932747, "oy": 19619932747, "e": true, "d": 2029, "g": 0.477, "og": 0.477}, {"l": "2030", "x": "2030-12-31", "y": 19713519827, "oy": 19713519827, "e": true, "d": 2030, "g": 0.477, "og": 0.477}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-12-31": 42, "2027-12-31": 43, "2028-12-31": 44, "2029-12-31": 45, "2030-12-31": 46}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-12-31	2027-12-31	2028-12-31	2029-12-31	2030-12-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Dec 31	LTM Feb 28	2026 Dec 31	2027 Dec 31	2028 Dec 31	2029 Dec 31	2030 Dec 31
Revenue	138,191	138,191	138,850	139,512	140,178	140,847	141,518
Revenue Growth Rate	2.53%	0%	0.477%	0.477%	0.477%	0.477%	0.477%
Net Income	17,174	17,174	19,342	19,434	19,527	19,620	19,714

Monetary values in USD

amounts except #

2025
Dec 31

LTM
Feb 28

2026
Dec 31

2027
Dec 31

2028
Dec 31

2029
Dec 31

2030
Dec 31

Revenue

138,191

138,850

139,512

140,178

140,847

141,518

Revenue Growth Rate

2.53%

0.477%

Net Income

17,174

19,342

19,434

19,527

19,620

19,714

Historical Values

Monetary values in USD amounts except #	Average	LTM Feb 28	2025 Dec 31	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31
Revenue	132,603	138,191	138,191	134,788	133,974	136,835	133,613	128,292	131,868	130,863	126,034	125,980
Cost of Revenue	70,670	61,215	75,114	71,989	72,511	76,232	72,507	67,921	71,408	72,608	68,510	67,352
Gross Profit	61,933	76,976	63,077	62,799	61,463	60,603	61,106	60,371	60,460	58,255	57,524	58,628
Gross Margin	46.68%	55.7%	45.64%	46.59%	45.88%	44.29%	45.73%	47.06%	45.85%	44.52%	45.64%	46.54%
Operating Income	29,429	29,259	29,259	30,604	28,831	30,467	31,965	29,867	31,029	30,007	26,519	25,910
Operating Margin	22.19%	21.17%	21.17%	22.71%	21.52%	22.27%	23.92%	23.28%	23.53%	22.93%	21.04%	20.57%
Net Income	18,419	17,174	17,174	17,506	11,614	21,256	22,065	17,801	19,265	15,528	30,101	13,127
Net Margin	13.93%	12.43%	12.43%	12.99%	8.67%	15.53%	16.51%	13.88%	14.61%	11.87%	23.88%	10.42%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Feb 28	2025 Dec 31	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31
Revenue	132,603	138,191	138,191	134,788	133,974	136,835	133,613	128,292	131,868	130,863	126,034	125,980
Revenue Growth Rate	0.477%	0%	2.53%	0.608%	-2.09%	2.41%	4.15%	-2.71%	0.768%	3.83%	0.043%	-4.29%
Net Income	18,419	17,174	17,174	17,506	11,614	21,256	22,065	17,801	19,265	15,528	30,101	13,127
Net Margin	13.93%	12.43%	12.43%	12.99%	8.67%	15.53%	16.51%	13.88%	14.61%	11.87%	23.88%	10.42%
Net Income Growth Rate	8.59%	0%	-1.9%	50.73%	-45.36%	-3.67%	23.95%	-7.6%	24.07%	-48.41%	129.3%	-26.58%
Stockholders Equity	74,684	104,460	104,460	99,237	92,430	91,144	81,790	67,842	61,395	53,145	43,096	22,524
Equity Growth Rate	20.35%	0%	5.26%	7.36%	1.41%	11.44%	20.56%	10.5%	15.52%	23.32%	91.33%	37.11%
Return on Invested Capital (ROIC)	9.05%	7.04%	7.04%	7.57%	6.32%	7.17%	7.76%	8.98%	11.06%	10.94%	17.72%	7.96%
After-tax Operating Income	24,403	22,724	22,724	23,905	20,528	23,437	24,575	22,865	27,009	24,526	39,339	16,801
Income Tax Rate	16.64%	22.34%	22.34%	21.89%	28.8%	23.07%	23.12%	23.44%	12.95%	18.26%	-48.34%	35.16%
Invested Capital	280,533	322,840	322,840	315,746	324,967	326,904	316,515	254,650	244,265	224,154	222,027	210,960