If a CEO is buying their company’s stock, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually a long way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.
Here, we are going to highlight an interesting insider purchase at Verizon Communications Inc (VZ:US). Verizon Communications is a multinational company that provides technology and communication services. The company’s mobile network is the largest wireless carrier in the United States. It also offers broadband, wireless communication services, data security services, and numerous other services to business and retail clients. Its primary listing is on the New York Stock Exchange and it currently has a market capitalization of $222 billion.
Verizon Communications Inc: Insider Buying
Our insider transaction data shows that on January 26, the CEO of Verizon Communications, Hans Vestberg, purchased 19,000 VZ shares at a price of $52.55 per share. This purchase cost the insider about $1 million and increased his holding by around 15%.
We were drawn to this insider trade for a few reasons.
Firstly, Mr. Vestberg is likely to know the communications sector very well. Previously, he was Chief Technology Officer at Verizon Communications before becoming CEO in 2018. Before this, he was CEO of Ericsson for six years and CFO for two years prior to this. At Ericsson, he was instrumental in developing its services organization, which grew three-fold during the five years he managed it. This impressive resume suggests he is likely to have a good understanding of Verizon Communications’ prospects.
Secondly, in spending close to $1 million on Verizon stock. Mr. Vestberg is indicating that he believes the market is undervaluing his company’s shares. Our data shows that this is the first significant insider purchase of stock for a long period of time which is significant as it suggests the CEO has spotted a trend that has led him to believe the timing is now right to pick up a large amount of stock.
Strong EPS Growth
Verizon Communications recently delivered a promising set of Q4 figures.
When the sale of Verizon Media was adjusted for, operating revenue of $34.1 billion in the quarter was an increase of 4.8% on the year prior, while Verizon Consumer revenues of $25.7 billion were up 7.4% year on year. Wireless equipment revenue and wireless service revenue were both strong. Adjusted EPS jumped to $1.31, an 8.3% increase year over year.
For 2022, the company expects organic service and other revenue growth of about 3% and adjusted EBITDA growth to be in the range of 2-3%.
“We delivered on all of our goals in 2021 and made great progress on our five paths of growth, finishing the year with strong operating and financial momentum. As we move into 2022, we have the necessary assets to realize our strategy that we laid out in 2019. We are laser focused on executing our 5G strategy and providing value to our customers, shareholders, employees, and society, as 2022 will be the most exciting year yet for Verizon," said Mr. Vestberg.
On the back of these encouraging results and enthusiastic outlook for the business we see the recent insider buying as bullish. It suggests that the CEO believes the shares will trend in an upward trajectory having been subdued over the past twelve months.