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Upside requires the FY2027 revenue and earnings estimates to be met and operating cash after capital spending to recur.
Free cash flow remains below cash dividends, or coverage stays below 1.0x, for two consecutive fiscal years.
Strong Buy: at the report-date price of $50.41, Verizon trades below Fair value of $78.19 and Potential value of $161.26.3
The main risk is dividend coverage. If free cash flow stays below cash dividends for two consecutive fiscal years, capital spending and financing could force dividend growth to stop or the payout to fall.3
The clearest upside is sustained cash after network investment. Combined with the FY2027 earnings recovery, that cash could support dividends and debt reduction, raising value per share.14
A better demand period would appear as sustained revenue growth with stable operating margin. That combination would raise operating profit and cash available after network investment.1
Strong Buy because the report-date price is below Fair value while operating cash supports the distribution after capital spending.34
A better demand period would require FY2027 revenue delivery and operating margin holding near the FY2025 level. That combination would raise operating profit and leave more cash after network investment.
Strong Buy. The report-date price is below Fair value, and that gap is the basis for the rating. The view holds while cash after capital spending supports dividends and debt reduction; repeated dividend-coverage failure would weaken it.34
VERIZON COMMUNICATIONS INC provides these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world.
If consolidated revenue growth stays below 0.5% and operating margin stays below 18% for two fiscal years, sales and profit would weaken together. If pre-tax debt cost also exceeds 7.78% while dividend coverage remains below 1.0x for two fiscal years, creditors and capital spending would absorb more cash before shareholders benefit.
The available evidence is insufficient to determine whether Verizon has durable switching costs, customer-retention advantages, network-scale economics, a lasting cost edge, or strong barriers to entry. The supplied peer data cover outcomes, not those structural mechanisms.
The peer set shows wide differences in growth, margins, and valuation. That dispersion supports competitive stress testing, but not a claim that every peer has the same business model.
The 5.6628% WACC is a hurdle rate, not evidence that returns exceed it over time. Economic-profit durability is therefore unproven.2
None of the valuation methods used to calculate Fair value relies on a separate assumption about how long the competitive advantage lasts.
The highlighted cell is Fair value when every assumption sits at its base level ($78.19). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $25.9B after modeled capex of $14.7B, with terminal value at 66.7% of . A sudden drop in free cash flow is not projected unless capital spending relative to , reinvestment, or resets materially.
Judge a sales beat by whether cash after network investment also rises. Capital spending is a separate claim on operating cash.
The industry benchmark was 0.9% capital spending to revenue and 1.05x capital spending to depreciation as of 2026-09-01.
A better demand period would require FY2027 revenue delivery and operating margin holding near the FY2025 level. If operating cash also exceeds capital spending, more cash could remain after network investment.
A weaker period would show up as slower revenue growth and lower operating margin. Those results would reduce earnings and cash. Promotions, pricing, and retention spending would be possible explanations to test, not established causes.
Build toward a core position while keeping size below the portfolio maximum, consistent with the Strong Buy rating. Adding beyond that requires revenue, margin, dividend coverage, and debt to improve together. Reassess or trim if revenue growth is below 0.5% for two fiscal years, margin is below 18% for two years, or dividend coverage is below 1.0x for two years. Also reassess if pre-tax debt cost exceeds 7.78% while debt remains substantial.
Keep position size below the portfolio maximum until dividend coverage, revenue delivery, and debt reduction are visible together.
FY2025 operating cash and capital spending support the distribution, although leverage requires ongoing coverage checks.34
The report-date price is below Fair value, and FY2027 estimates provide a dated recovery anchor.13
Use staged purchases because debt, capital needs, and valuation dispersion make the path uneven.3
Strong Buy; the report-date price sits below Fair value while operating cash after capital spending supports the distribution. Recurring capital spending and debt remain competing claims on that cash, so track revenue, margin, dividend coverage, and debt evidence.3
The valuation gap is attractive, but dividend coverage and refinancing costs must remain within the stated limits.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
This path would be confirmed by weaker dividend coverage, persistent margin pressure, or higher refinancing costs by FY2027. It would be disconfirmed by stable cash coverage and visible debt reduction.
Coverage below 1.0x for two consecutive fiscal years would halt dividend growth or force a cut as capital spending and financing consume residual cash.
Consolidated revenue growth below 0.5% for two consecutive fiscal years would weaken the earnings recovery and reduce cash available for shareholders.
An operating margin below 18% for two consecutive fiscal years would indicate that pricing pressure and retention costs are eroding profit and cash generation.
A pre-tax debt cost above 7.78% while debt remains substantial would divert more cash to creditors and reduce dividend and deleveraging capacity.
A forward or terminal earnings multiple below 8x would show that investors are paying less for each dollar of future earnings.
The five developments that would weaken our investment case.
The breach would leave the distribution dependent on borrowing or reduced investment, weakening dividend durability and limiting balance-sheet repair.
Current:FY2025 operating cash flow was $37.14 billion and capital spending was $17.01 billion.
Alert ifFree cash flow below cash dividends, or coverage below 1.0x, for two consecutive fiscal years.
Sustained weakness would invalidate the modest recovery and reduce revenue available to support operating profit and cash generation.
Current:The FY2027 analyst revenue estimate was $143.59 billion as of 2026-09-09.
Alert ifAnnual revenue growth below 0.5% for two consecutive fiscal years.
A sustained margin loss would reduce operating profit and cash after investment. Pricing, promotions, or retention spending would be possible explanations to test, not causes established by the breach alone.
Current:FY2025 operating income was $29.26 billion on revenue of $138.19 billion.
Alert ifConsolidated operating margin below 18% for two consecutive fiscal years.
Higher refinancing expense would transfer more operating cash to creditors, slowing debt reduction and reducing room for dividends or network investment.
Current:The pre-tax cost of debt was 5.78% on 2026-09-09.
Alert ifPre-tax cost of debt above 7.78% while the debt balance remains substantial.
Such compression would reduce value per share because investors would pay less for each dollar of future earnings. It would not, by itself, establish whether growth or leverage caused the change.
Current:The forward price-to-earnings multiple was 9.41x on 2026-09-09.
Alert ifForward or terminal price-to-earnings multiple below 8x within 24 months.
| Threat | Severity | Timeline | Mitigation |
|---|---|---|---|
| TMUS and T are the closest wireless comparisons, but their growth profiles differ. Their presence can increase promotion and retention spending. | high | Through FY2027 and beyond | The FY2027 revenue estimate is $143.59 billion. That forecast level does not establish durable market-share gains.1 |
| CMCSA is an adjacent connectivity comparison, while DIS tests consumer-wallet competition. Neither is interchangeable with a wireless carrier. | medium | Medium term | Judge the threat through Verizon's revenue and operating margin rather than peer identity alone. |
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Limitation: Terminal value is 78.2% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Solve for the growth rate that makes the model value equal the report-date share price.
The base path requires FY2027 revenue and diluted earnings per share to align with the cited analyst estimates. Operating margin and cash after capital spending should remain near FY2025 levels. FY2027 results would test the path.134
Use FY2027 results to test whether the cited revenue and earnings estimates are met, operating cash continues to exceed capital spending, and debt declines. A weaker margin or debt remaining substantial by FY2027 would reject this path.134
Meeting expectations preserves the near-term case but does not prove longer-term persistence.
Such a miss would reduce earnings and distributable cash. Pricing, promotions, or retention spending would be hypotheses to test, not causes established in advance.
Operating cash exceeded reported profit in FY2025, but the large debt balance means strong cash reporting does not remove balance-sheet risk.34
Slower growth would weaken the recovery and reduce operating leverage.1
Earnings must rise faster than sales without relying on unsupported margin expansion.1
Weaker coverage would make the distribution compete more directly with borrowing and network investment.4
Lower debt would reduce refinancing claims and leave more cash for shareholders.3
| $133.61B |
| $136.84B |
| $133.97B |
| $134.79B |
| $138.19B |
| +0.8% |
| Gross profit | $61.11B | $60.60B | $61.46B | $62.80B | $63.08B | +0.8% |
| Operating income | $32.45B | $30.47B | $22.88B | $28.69B | $29.26B | -2.6% |
| Net income | $22.07B | $21.26B | $11.61B | $17.51B | $17.17B | -6.1% |
| EPS (diluted) | $5.32 | $5.06 | $2.75 | $4.14 | $4.06 | -6.5% |
| EBITDA | $49.12B | $48.95B | $40.14B | $47.52B | $47.72B | -0.7% |
| R&D | — | — | — | — | — | — |
| SG&A | $28.66B | $30.14B | $32.75B | $34.11B | $33.82B | +4.2% |
FY2025 operating cash of $37.14 billion exceeded capital spending of $17.01 billion. This supports distributions, but the $200.59 billion debt balance keeps refinancing risk material.34
The priority is balancing network investment, dividends, and debt reduction. The $200.59 billion FY2025 debt balance means stronger operations may benefit creditors before equity holders.
A multi-year return-on-invested-capital trajectory is not used to support the thesis. The report instead relies on dated operating profit, cash flow, and investment evidence.
The established WACC was 5.6628% on 2026-09-09; no comparable cited multi-year ROIC series is used to claim a durable spread.
FY2025 operating cash was $37.14 billion, versus net income of $17.17 billion.
This supports cash generation, but operating cash alone does not establish dividend coverage. Capital spending and debt remain competing claims on cash.
The FY2027 revenue estimate was $143.59 billion and diluted EPS was $5.28 as of 2026-09-09.
The checkpoints are FY2027 revenue and EPS versus those estimates, plus operating profit, operating cash, and capital spending versus their FY2025 levels.
| Revenue | $138,191,000,000 |
|---|---|
| Cost of revenue | $75,114,000,000 |
| Gross profit | $63,077,000,000 |
| Operating expenses | $33,818,000,000 |
| Operating income | $29,259,000,000 |
| Non-operating items and tax | -$12,085,000,000 |
| Net income | $17,174,000,000 |
| Total assets | $404,258,000,000 |
|---|---|
| Cash | $19,048,000,000 |
| Current assets | $56,922,000,000 |
| Total liabilities | $298,517,000,000 |
| Current liabilities | $62,370,000,000 |
| Shareholders’ equity | $105,741,000,000 |
| Net income | $17,174,000,000 |
|---|---|
| Operating inflow | $37,137,000,000 |
| Depreciation and amortization | $18,349,000,000 |
| Other operating adjustments | $1,614,000,000 |
| Operating cash flow | $37,137,000,000 |
| Cash available | $41,772,000,000 |
| Beginning cash | $4,635,000,000 |
| Investing outflow | $16,660,000,000 |
| Financing outflow | $5,613,000,000 |
| Net debt issuance | $7,817,000,000 |
| Dividends paid | $11,481,000,000 |
| Other financing activities | $1,949,000,000 |
| Ending cash | $19,499,000,000 |
| Investing cash flow | -$16,660,000,000 |
| Financing cash flow | -$5,613,000,000 |
Point-in-time financial data used in the 2026-09-09 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $126B | $41.3B | $13.1B | $21.7B | $4.6B | $17.1B | $15.9B | $400M | $0 | $9.3B | — | -$9.9B | -$13.4B | — | $3.2B | $2.9B | $108.1B | 23.2% | — | 3.7% | — |
| 2017-12-31 | $126B | $42.3B | $30.1B | $24.3B | $7.1B | $17.2B | $17B | $384M | $0 | $9.5B | — | -$18.5B | -$6.2B | $3.2B | $2.9B | $2.1B | $117.1B | 21.8% | — | 4.4% | — |
| 2018-12-31 | $130.9B | $41.9B | $15.5B | $34.3B | $17.7B | $16.7B | $17.4B | $720M | — | $9.8B | — | -$17.9B | -$15.4B | $2.9B | $3.9B | $2.7B | $113.1B | 17.0% | — | 4.3% | — |
| 2019-12-31 | $131.9B | $44.1B | $19.3B | $35.7B | $16.9B | $18.8B | $16.7B | $737M | — | $10B | — | -$17.6B | -$18.2B | $3.9B | $3.9B | $2.6B | $133.1B | 23.0% | — | 3.6% | — |
| 2020-12-31 | $128.3B | $45B | $17.8B | $41.8B | $21.5B | $20.3B | $16.7B | $961M | — | $10.2B | — | -$23.5B | $1.3B | $3.9B | $23.5B | $20.9B | $150.5B | 22.4% | — | 2.1% | — |
| 2021-12-31 | $133.6B | $49.1B | $22.1B | $39.5B | $19.3B | $20.3B | $16.2B | $986M | — | $10.4B | — | -$67.2B | $8.3B | $23.5B | $4.2B | $2.9B | $177.9B | 24.3% | — | 2.5% | — |
| 2022-12-31 | $136.8B | $49B | $21.3B | $37.1B | $10.4B | $26.7B | $17.1B | $433M | — | $10.8B | $4.3B | -$28.7B | -$8.5B | $4.2B | $4.1B | $2.2B | $176.3B | 22.3% | — | 4.4% | — |
| 2023-12-31 | $134B | $40.1B | $11.6B | $37.5B | $18.7B | $18.8B | $17.6B | $533M | — | $11B | -$2B | -$23.4B | -$14.7B | $4.1B | $3.5B | $1.8B | $174.9B | 17.1% | — | 4.5% | — |
| 2024-12-31 | $134.8B | $47.5B | $17.5B | $36.9B | $18.9B | $18B | $17.9B | — | — | $11.2B | -$4.8B | -$18.7B | -$17.1B | $3.5B | $4.6B | $4.2B | $168.4B | 21.3% | — | 5.4% | — |
| 2025-12-31 | $138.2B | $47.7B | $17.2B | $37.1B | $20.1B | $17B | $18.3B | — | — | $11.5B | $7.8B | -$16.7B | -$5.6B | $4.6B | $19.5B | $19B | $200.6B | 21.2% | — | 5.0% | — |
Verizon Communications Inc. (VZ) trades at 9.4x forward earnings against a peer median of 11.3x. Its EV/EBITDA of 7.9x compares with a peer median of 8.3x. The comparison uses 4 peers: T-Mobile US Inc., AT&T Inc., The Walt Disney Company and Comcast Corporation, as of 2026-09-09.
| Trend | Impact | Note |
|---|
| Low-growth connectivity demand | neutral | FY2027 revenue is estimated at $143.59 billion. That single forecast level does not establish continued demand or a high-growth path. |
| Persistent capital needs | negative | FY2025 capital spending of $17.01 billion absorbed a substantial share of operating cash before distributions and debt reduction. |
FY2025 operating cash was $37.14 billion, while debt was $200.59 billion. The debt balance means cash must also serve financing claims if demand weakens.34
| Why |
|---|
| At the report-date price of $50.41 | Initiate or add at or below the report-date price, which sits below Fair value. Stage purchases and keep room to add as revenue, margin, dividend coverage, and debt improve together. Reassess or trim if revenue growth, operating margin, or dividend coverage breaches its two-year threshold, or if pre-tax debt cost exceeds 7.78% while debt remains substantial. Also reassess after a material improvement or weakening in revenue, diluted earnings per share, operating margin, or cash after capital spending. | A lower price does not remove operating and refinancing risks, so stage entry and watch the revenue, margin, dividend-coverage, and debt evidence that would weaken the rating. |
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Limitation: Terminal value is 66.7% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
| AT&T Inc. |
| 10.0x |
| 1.4x |
| 7.6x |
| 18.3% |
| 24.8% |
| DIS | The Walt Disney Company | 14.1x | 1.8x | 10.9x | 8.0% | 19.3% |
| CMCSA | Comcast Corporation | 7.3x | 0.7x | 5.2x | 11.5% | 17.2% |
