Verizon Communications Inc. (VZ), AT&T Inc. (T), Sprint Nextel Corporation (S): Investors Are Seeing Red and That’s a Good Thing

Did I mention its customers spend more money too?

What do you get when you combine a superior network, better subscriber additions, and low churn? Apparently what you get when you combine these factors is subscribers who are willing to spend more money on their service. Verizon Wireless’ average revenue per customer rose by 6.4% in the recent quarter, while AT&T saw a 1.8% increase, and Sprint only fared slightly better with a 2.56% improvement.

While it’s true that Verizon is more than just Verizon Wireless, this unit is the growth driver for the company and its superior performance is a strong argument for buying the shares. Verizon’s share price doesn’t scream value at about 16.7 times projected EPS, but the company’s 4.4% yield should help investors wait patiently for returns.

Although AT&T does pay a higher yield of 5.3%, Sprint isn’t even in the ballgame with no payout. To make matters worse for these companies, Sprint is expected to grow earnings by just 5% in the next few years, while analysts expect 6.5% growth from AT&T. It seems like analysts are listening better than some investors, as they expect almost 10.5% EPS growth from Verizon in the next few years. Combine superior performance in their wireless business, the strongest growth in their peer group, and a respectable yield, and investors who want to make some green for their portfolios should set their sights on Big Red.

The article Investors Are Seeing Red and That’s a Good Thing originally appeared on Fool.com and is written by Chad Henage.

Chad Henage owns shares of Verizon Communications (NYSE:VZ). The Motley Fool has no position in any of the stocks mentioned.

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