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

Verizon Communications released its second-quarter earnings report on July 21. 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’ Q2 Earnings

Verizon is unlikely to grow as fast as its two primary US wireless rivals, but we still believe its shares are the most attractive among the group. We expect the firm will grow free cash flow consistently in the coming years, supporting the current 6.3% dividend yield and allowing for share repurchases to resume next year.

Fair Value Estimate for Verizon

With its 4-star rating, we believe Verizon’s stock is under-valued compared with our long-term fair value estimate of $53, which equates to roughly 7.5 times our 2025 EBITDA forecast. Based on Verizon’s performance in 2024 and management’s forecast for 2025, our valuation also implies an 8% free cash flow yield.

We expect Verizon will gradually lose postpaid wireless market share over time as it prioritizes pricing stability rather than growth. Smaller rivals T-Mobile and AT&T have similar network resources and should be able to 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 allowing for stable service pricing, we expect revenue per postpaid customer will grow steadily in the coming years. However, recent promotional activity will likely dent growth in the near term as phone discounts offset service revenues.

Read more about Verizon Communications’ fair value estimate.

Economic Moat Rating

Verizon’s moat stems from cost advantages in its wireless business and the 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 nearly 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 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 increased to $106 billion, or 2.5 times EBITDA, prompting downgrades from the major credit rating agencies. At the time, management pledged to reduce leverage, but Verizon failed to meet this commitment, as dividends, acquisitions, and spectrum purchases offset cash flow and asset sales to keep 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, pushing net debt up to $150 billion. The cost to deploy this spectrum and the dividend payout have hindered efforts to reduce leverage. Net debt stood at $143 billion at the end of the second quarter of 2025, putting net leverage at about 2.9 times normalized EBITDA.

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. 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.

Read more about Verizon Communications’ risk and uncertainty.

VZ Bulls Say

• A focus on network strength over the past 15 years has put Verizon in an enviable position. Its wireless network provides the broadest coverage in the industry, and its reputation with customers is sterling
• With the largest customer base in the United States, Verizon is the most efficient carrier in the industry, delivering far better profitability than its rivals.
• 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

• Wireless technology is dramatically lowering the cost to build and maintain a network. Rival carriers have rapidly deployed new spectrum and technology to add coverage and capacity. Verizon’s network leadership is a thing of the past.
• 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 will take time, limiting strategic flexibility and shareholder returns.

This article was compiled by James Ubi.