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

Verizon Communications released its second-quarter earnings report on July 24. Here’s Morningstar’s take on Verizon’s earnings and stock.

Key Morningstar Metrics for Verizon Communications

• Fair Value Estimate
  : $54.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Verizon Communications’ Q2 Earnings

Verizon reported a 3.5% increase in service revenue during the second quarter. Excluding the benefit of the Frontier acquisition, service revenue was down about 1.7%. Wireless and fiber broadband growth improved, flipping to a small increase from a small decline last quarter.

Why it matters: Verizon’s results echo those of rivals AT&T and T-Mobile, showing signs of modestly receding competitive intensity. Customer defections, or churn, decelerated year over year for the first time since 2024. Phone discounts weren’t a factor, as customer upgrades were the slowest on record.

• Lower service pricing has been the biggest source of Verizon’s improvement. We estimate revenue per phone customer dropped about 4% versus a year ago, significantly narrowing the gap between it and T-Mobile. Verizon’s share of new customer decisions, or gross adds, has rebounded nicely.
• While traditional postpaid wireless revenue is declining, contributions from prepaid, wireless broadband, and wholesale have mostly offset this loss. Wireless broadband customer growth has slowed, though, as Verizon prioritizes its fiber offering.

Big picture: Verizon management matched AT&T in forcefully denying any interest in a wholesale wireless partnership with SpaceX or any other satellite provider.

• The firm revealed that other firms can’t piggyback on its wholesale agreements with Comcast and Charter, throwing water on the idea that SpaceX might acquire one of these firms to get into the wireless market.

The bottom line: We’ve increased our fair value estimate to $54 per share from $53.

• We’re pleased to see that competitive intensity has not ramped back up in response to Verizon’s moves to bring its wireless pricing in line with rivals. This dynamic supports our narrow economic moat ratings on the wireless carriers.
• The firm also discussed fiber agreements to connect data centers for the first time. This opportunity could provide modest additional upside to our fair value estimate.
• Verizon is in a very similar position to AT&T T, which is a bit unusual. Usually one or the other is favored, but they’re currently trading at almost-identical discounts to our fair value estimates. We think it’s increasingly hard to differentiate between the two, as their strategies have converged over the past couple of years. Verizon is attractive here. It’s not super cheap, but like AT&T, it offers a great, well-funded dividend.

The following are excerpts from Morningstar’s company report on Verizon Communications.

Fair Value Estimate for Verizon Communications

With its 4-star rating, we believe Verizon stock is moderately undervalued compared with our long-term fair value estimate of $54 per share, which equates to roughly 7.6 times our 2026 EBITDA forecast. With a rational competitive environment and stable service pricing, we expect revenue per postpaid customer to grow modestly but steadily over the long term. However, Verizon’s recent decision to shift its wireless pricing strategy and the amortization of heavy phone discounts in 2025 have dented growth.

We forecast that 2026 wireless service revenue will be flat year over year as changes work through the customer base. After a bump from the Frontier acquisition in 2026, we expect consumer fixed-line broadband revenue to grow 13% annually through 2030 as Fios continues to attract broadband customers and pricing power remains strong. We also assume two large spectrum acquisitions in the coming years, in addition to smaller annual purchases.

Read more about Verizon Communications’ fair value estimate.

Economic Moat Rating

Verizon’s narrow moat stems from the wireless industry’s efficient scale characteristics. Verizon, AT&T, and T-Mobile dominate the US wireless market, claiming around 90% of retail postpaid phone customers. The benefits of fixed-cost leverage, the difficulty of providing a differentiated wireless offering, the massive consolidation across the industry, and the ability of players like EchoStar and Comcast to enter the market create an efficient scale advantage in the wireless industry.

Satellite poses the latest threat to the efficient-scale attributes of the wireless business. We don’t believe satellite providers like SpaceX will be able to amass the wireless spectrum needed to provide capacity similar to the terrestrial wireless network today. Verizon’s fixed-line operations are challenged on a stand-alone basis and don’t possess a moat, in our view. Verizon’s international business doesn’t possess a moat either, as it has declined rapidly in recent years—to about $11 billion in revenue in 2025 from $16 billion five years earlier. Management has provided minimal transparency, but we suspect advances in networking technology have eroded the firm’s advantages in several areas.

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 2021 C-band spectrum auction and the Frontier acquisition have also significantly pushed up the debt load.

Verizon paid dividends totaling $11.5 billion in 2025, representing approximately 60% of free cash flow. In addition, the firm has started repurchasing shares despite leverage sitting above the targeted range. Management expects net leverage to return to its target by 2027, but we would prefer the firm move more quickly to repay debt given the potential need to invest in additional wireless spectrum or other assets.

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. 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. Recent legislation has instructed US government agencies to work together to free up spectrum as quickly as possible, with auctions now planned in 2027 and 2028.

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. Technology could eventually lower barriers to entry for firms that have long wanted to enter the business, including the large cable companies. Improving satellite technology could also threaten both the wireless and broadband businesses.

Verizon is increasingly engaged in a turf war with the cable companies. It has launched a fixed-wireless offering that combines its fiber infrastructure and wireless technology to offer broadband service to customers. The cable companies have attacked the wireless market, albeit using Verizon’s wireless network to serve customers. As these companies attempt to bundle multiple services, the temptation to offer large discounts could mount.

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 Irza Waraich.