Verizon VZ Stocks fell after management suggested in the first quarter that wireless competition was more aggressive than usual on March 11. But we think that for a number of reasons, this news is just a small clash on the road. First, Verizon repeated its full-year forecasts for customer additions, growth and profitability. Second, I argue that using promotions to gain market share over the long term is useless. As a result, it is far below the $53 fair value estimate, so I think this high-resolution stock looks attractive to those looking for income. Verizon is also among America’s chief market strategist Dave Sekera’s Four stocks to buy during tariff uncertainty.
Verizon is primarily focused on the wireless business and takes steps to ensure it remains well positioned, building the fibers deep into the main metro areas and obtaining wireless spectra to improve network capacity and performance. It has long been pride in the quality of its network and has consistently invested in wireless and fixed wire technology. Verizon builds a brand reputation around these networks, attracting a large, loyal customer base. In the wireless business, the company owns about 40% of the US postpaid phone market, about a third of AT&T. t Or t-mobile TM. The key scale allows Verizon to generate the highest margins and returns of capital in the industry.
Verizon Key Morning Star Metrics
Economy Moat Rating
Verizon’s narrow moats stem from the cost advantages in wireless business and industry efficient scale characteristics. Verizon has organized its business along its customer lines and considers it best understood along the wireless and fixed line dimensions. The wireless business generates around 70% of its service revenue, but contributes almost all of Verizon’s profits. We estimate that the wireless return of investment capital was around 16% before 2021. Large investments to acquire additional spectra at C-band auctions, and subsequent spending to use subsequent spending, estimates raise wireless returns on capital to low double digits, leaving Verizon ahead of the cost of capital.
Read more about Verizon’s Hori ratings.
Verizon Stock Fair Value Estimation
Our fair value estimate is $53 per share. The average annual wireless service revenue growth is expected to be around 3% from 2024 to 2028. As FIOS continues to attract broadband customers and its pricing power remains strong, we expect consumer fixed line revenue to increase by 1% each year through 2028. If we offset this growth, the television and telephone business will continue to decline. We believe the fixed line business services segment could return to growth in the coming years. The integrated, adjusted EBITDA margin is expected to remain almost flat at around 35% over the next five years. Verizon expects to actively invest in textiles over the next few years, and its annual capital expenditure is expected to exceed $19 billion by 2028.
Find out more about Verizon’s fair value estimates.
Risk and uncertainty
Verizon is primarily facing regulatory and technological uncertainty. If the service is deemed inadequate or expensive, regulators and politicians could intervene. Media coverage highlights the potential risks associated with lead-shees cables that are commonly deployed in telecom networks in the 1960s. The liabilities and costs associated with removing these cables are unknown today if they appear necessary. The new spectrum flooding will allow prices to be reduced and ease entry into the wireless business. Technology could lower barriers to entry for businesses that have long wanted to enter the business. Large cable companies already deploy Wi-Fi throughout their networks, offering limited wireless coverage.
Read more about Verizon’s risks and uncertainties.
Verizon Bulls says
With its focus on the network’s strengths over the past 15 years, Verizon has been envious of its enviable position. Its wireless network offers the widest coverage in the industry and has a reputation for customers being Sterling.
With the largest customer base in the US, Verizon Wireless is the most efficient carrier in the industry, offering far better profitability than its rivals.
Verizon is mercilessly moving its core business forward, expanding its fiber optic network and deploying 5G wireless technology.
Verizon Bears says
Wireless technology dramatically reduces the costs of building and maintaining a network. Rival carriers are rapidly rolling out 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 and faces the long-standing high costs needed to minimize profits and help reduce revenue.
Verizon’s balance sheet was not once a fortress. Paying off your debt limits strategic flexibility and shareholder returns. Debt tied to a lead sheath cable could add another headache.
This article was edited by Susan Ziuvinski and Sylvia Hauser. Data as of March 12, 2025.
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