After Earnings, Is Verizon Stock a Buy, a Sell, or Fairly Valued?

Verizon Communications VZ released its fourth-quarter earnings report on Jan. 30. Here’s Morningstar’s take on Verizon’s earnings and stock.

Key Morningstar Metrics for Verizon Communications

• Fair Value Estimate: $53.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of Verizon Communications’ Q4 Earnings

Verizon delivered improved customer metrics during the fourth quarter, adding 22% more postpaid wireless phone customers than the prior year. Wireless service revenue growth slowed to 1% from around 2.5% over the prior several quarters, reflecting competitive intensity in the market.

Why it matters: Verizon is radically shifting course. Rather than investing heavily in its network and charging premium prices, the firm has slashed its 2026 capital budget and eliminated thousands of jobs. This isn’t the shift toward competitive balance we’d anticipated, but it is functionally similar.

• Management has long said “business-as-usual” capital spending is in the range of $17.5 billion annually. Recently acquired Frontier has been spending about $3 billion annually to expand its networks. Verizon plans to spend $16 billion-$16.5 billion in 2026, a roughly $4 billion cut.
• Verizon plans to maintain the pace of fiber network expansion, which we estimate implies that wireless network spending will decline by more than $2 billion, more closely matching T-Mobile’s annual budget.

The bottom line: We maintain our $53 fair value estimate. We’ve cut our 2026 wireless service revenue estimate sharply (from 1.5% growth to flat), but we have also trimmed our capital spending expectations. We expect network investment to increase beyond 2026 but remain below our prior estimates.

• Verizon provided postpaid phone customer addition expectations for the first time (0.75-1.0 million in 2026). AT&T has consistently said it expects to add at least its “fair share” of industry growth, which has translated into about 1.6 million annually. T-Mobile now knows where both rivals stand.
• Our narrow moat ratings on Verizon, AT&T, and T-Mobile rest on our belief that competition will remain rational, as no firm can gain in the long run through efforts to price aggressively or invest heavily. Lowering industry capital intensity would improve cash flow for all firms.

Fair Value Estimate for Verizon Communications Stock

With its 4-star rating, we believe Verizon stock is moderately undervalued compared with our long-term fair value estimate of $53 per share, which equates to roughly 7.6 times our 2026 EBITDA forecast. Based on Verizon’s performance in 2025 and management’s forecast for 2026, our valuation also implies an 9%-10% free cash flow yield. The firm currently trades at an enterprise value of about 6.7 times 2026 EBITDA, with an 11%-12% free cash flow yield.

We expect Verizon to gradually lose postpaid wireless market share. Smaller rivals T-Mobile and AT&T have comparable network resources and should attract roughly the same number of customers each quarter as Verizon. This parity should naturally cause the firms’ market shares to slowly converge. With a rational competitive environment and stable service pricing, we expect revenue per postpaid customer to grow modestly but steadily over the coming years.

Read more about Verizon Communications’ fair value estimate.

Economic Moat Rating

Verizon’s moat stems from the wireless industry’s efficient scale characteristics. The firm has organized its business along customer lines, but we believe it is best understood along the wireless and fixed-line network dimensions. The wireless business produces 75% of service revenue but contributes nearly all of Verizon’s profits. We estimate wireless returns on invested capital were about 16% prior to 2021. Heavy investment to acquire additional spectrum in the C-band auction and subsequent spending to put that spectrum to use, have pulled wireless returns on capital to the low-double digits by our estimate, still leaving Verizon ahead of its cost of capital.

Verizon, AT&T, and T-Mobile dominate the US wireless market, claiming more than 90% of retail postpaid phone customers. Providing solid nationwide coverage requires heavy fixed investments in wireless spectrum and network infrastructure. A larger customer base requires incremental investment in network capacity, but a significant portion of costs are either fixed or more efficiently absorbed as network utilization reaches optimal levels in more locations.

Read more about Verizon Communications’ economic moat.

Financial Strength

Verizon transformed its balance sheet when it took on more than $65 billion of incremental debt in 2014 to finance the purchase of Vodafone’s 45% stake in the Verizon Wireless joint venture. Following that transaction, net debt leverage increased to 2.5 times EBITDA, prompting downgrades from the major credit rating agencies. Since then, dividends, acquisitions, and spectrum purchases have offset cash flow and asset sales, keeping leverage elevated.

The most significant recent balance sheet event was the 2021 C-band spectrum auction. Verizon spent more than $50 billion on C-band licenses. The cost to deploy this spectrum and the dividend payout have hindered efforts to reduce leverage. Net debt stood at $139 billion at the end of 2025, putting net leverage at about 2.8 times normalized EBITDA.

Management’s leverage targets now exclude debt secured by receivables. The firm hopes to maintain unsecured leverage between 2.00 and 2.25 times EBITDA. On this basis, leverage currently stands at 2.2 times, down from 2.3 times a year ago. However, the percentage of receivables securing debt has been steadily rising. Secured debt totaled about $26 billion at the end of 2024, or about 65% of total receivables, up from 45% at the end of 2021. Data for 2025 is not yet available.

Read more about Verizon Communications’ financial strength.

Risk and Uncertainty

Our Medium Uncertainty Rating reflects the volatility we think Verizon investors will experience relative to our global coverage. Verizon primarily faces regulatory and technological uncertainties, as well as the potential for irrational competition. Wireless and broadband services are often considered necessary for social inclusion in terms of employment and education. If Verizon’s services are deemed insufficient or overpriced, especially in response to weak competition, regulators or politicians could step in.

Regulators control wireless spectrum licensing, which creates opportunities to influence the wireless industry. A flood of new spectrum could drive down prices, further easing entry into the wireless business. Or, as we suspect was the case in the C-band auction, the threat of entry could drive up the prices Verizon feels compelled to pay. Recent legislation has instructed US government agencies to work together to free up spectrum as quickly as possible.

Verizon has been a leader in deploying the latest network technologies and has the resources to make major investments, which we think will insulate it from unexpected changes in the future. Still, wireless technology continues to evolve, enabling more efficient use of spectrum. Technology could eventually lower barriers to entry for firms that have long wanted to enter the business, including the large cable companies.

Read more about Verizon Communications’ risk and uncertainty.

VZ Bulls Say

• Verizon’s network focus over the past 15 years has given it the industry’s broadest wireless coverage, and its reputation with most customers is sterling.
• With the largest customer base in the US, Verizon is the most efficient carrier in the industry, delivering better profitability than its rivals. Combined with a growing fiber footprint, the firm also enjoys economies of scope.
• Verizon shares offer a fantastic dividend yield. The payout consumes less than 60% of free cash flow, providing plenty of cushion to maintain this income stream for shareholders.

VZ Bears Say

• Rival carriers have rapidly deployed new spectrum and technology to add coverage and capacity. Verizon’s network leadership is a thing of the past, and recent price increases have soured its reputation with customers.
• Verizon’s fixed-line business is a disaster, earning minimal profits and facing years of high costs necessary to support declining revenue.
• Verizon’s balance sheet isn’t the fortress it once was. Because of the dividend, paying down debt takes time, limiting strategic flexibility and shareholder returns after periods of heavy investment.

This article was compiled by Rachel Schlueter.