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

Verizon Communications released its first-quarter earnings report on April 27. Here’s Morningstar’s take on Verizon’s earnings and stock.

Key Morningstar Metrics for Verizon Communications Stock

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

What We Thought of Verizon Communications’ Q1 Earnings

Verizon grew revenue 2.9% during the first quarter, but we estimate sales would have been down about 1.0% excluding the Frontier acquisition. Adjusted EBITDA expanded 6.7% (about 3.0% excluding Frontier) on strong cost-cutting following a large workforce reduction last year.

Why it matters: Wireless customer churn remains elevated, reflecting the tough competitive environment, but Verizon is doing a much better job of attracting new customers than a year ago. The firm added 55,000 net postpaid phone customers, far better than the 289,000 loss last year.

• Lower pricing has helped with customer acquisition. Average revenue per postpaid wireless account declined 1.9%, the first drop since the onset of the pandemic. About half the decline was due to credits issued following a network outage. Heavy phone subsidies last year have also pressured this metric.
• Management expects wireless service revenue growth to rebound over the remainder of the year as phone subsidy amortization abates. Still, we don’t expect Verizon to grow wireless service revenue in 2026 after a 1.7% decline this quarter.

The bottom line: We maintain our $53 per share fair value estimate and narrow economic moat rating.

• Verizon reiterated several times that it has the capacity to respond to increased competition while still meeting its financial forecasts. To us, this commentary is intended to reduce competitive intensity.
• Verizon expects to introduce new wireless plans shortly, providing more insight into its effort to reduce phone promotions. AT&T and T-Mobile are moving in the same direction, which bodes well for the industry.

Key stats: Verizon repurchased $2.5 billion of its shares during the quarter, its first buyback in a decade. As with AT&T, we would prefer the firm focus on debt reduction to prepare for future capital needs, including spectrum auctions.

Fair Value Estimate for Verizon Communications Stock

With its 4-star rating, we believe Verizon stock is moderately undervalued. After adjusting our model to reflect Verizon’s revised strategy, we have maintained our $53 fair value estimate, 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.

Read more about Verizon Communications’ fair value estimate.

Economic Moat Rating

We assign Verizon a narrow moat based on the wireless industry’s efficient scale characteristics. With three sizable players, we don’t believe the major carriers will have an incentive to aggressively poach each other’s customers over the long term, given how painfully slowly market share shifts in the business.

Verizon’s fixed-line operations are challenged on a stand-alone basis and don’t possess a moat, in our view. These businesses account for a bit more than 20% of the firm’s invested capital base. In addition to the traditional residential and small-business telecommunications segments, Verizon serves large enterprise and carrier customers worldwide. This business has declined rapidly in recent years, to about $11 billion in revenue in 2025 from $16 billion five years earlier. We suspect advances in networking technology have eroded the firm’s advantages in several areas, and as a result, we don’t believe this segment has a moat. Verizon’s new CEO plans to shutter or sell nonstrategic businesses, most of which we suspect reside in this business segment.

Read more about Verizon Communications’ economic moat.

Financial Strength

Dividends, acquisitions, and spectrum purchases have offset cash flow and asset sales, keeping leverage elevated. Verizon paid dividends totaling $11.5 billion in 2025, representing approximately 60% of free cash flow. The Frontier acquisition increased unsecured net leverage to about 2.5 times EBITDA in early 2026. Management expects net leverage to return to its target range by 2027, even as share repurchases begin to ramp up in 2026.

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.

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 that could eventually lower barriers to entry. Verizon is increasingly engaged in a turf war with the cable companies. As these companies attempt to bundle multiple services, the temptation to offer large discounts could mount. Verizon may not realize the customer loyalty benefits it expects from bundling services in a highly promotional environment.

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 United States, 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 Jillian Moore.