From a qualitative perspective, I don't view the 'cord-cutting' trend as disastrous to the telecom industry because customers still need to access the internet from either a cellular LTE or broadband service. Much of the weakness in telecom is a result of the 'cord-cutting' trend, and I view this secular shift as priced into the stocks at this point. Furthermore, I believe recent consolidation in the sector has lowered competitive pressures. More consolidation is also a possibility given the merger-friendly Trump administration.
$VZ has been financially levered at over 2x debt to EBITDA following the acquisition of Verizon Wireless in 2014, but the industry median leverage is higher, at over 3x. Although I don't regard telecom as an industry in the best financial health, it has stablity and significant barriers to entry.
Finally, I looked at the dividend yield. $VZ has a much higher yield than the utilities sector, 4.7% versus 3.0%. $VZ is paying out between 50% to 70% of earnings in dividends. I view this payout ratio as sustainable. 2016 was a pretty rough year for $VZ. Revenue was down 4% and eps over 20%. In 2017, revenue is expected to be flat to down a hair. Margin pressures are expected to ease leaving eps flat, good enough to easily maintain the dividend.
Since I am not feeling particularly bullish on the overall market in the short-term given the bleak 1Q GDP outlook, I am searching for stability and yield, not a supercharged growth stock. So $VZ fits the bill, and has some potential upside due to its low valuation and the friendly regulatory environment. I could see $VZ making new ATHs this year, a 16+% upside. That would bring $VZ's valuation in line with $T (8.6x) on a EV/EBITDA basis.