Verizon Shares Are Up 3% Since Earnings. Is the Stock a Buy?

Verizon Communications released its third-quarter earnings report on Oct. 26. Here’s Morningstar’s take on Verizon Communications’ earnings and stock.

Key Morningstar Metrics for Verizon Communications

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

What We Thought of Verizon Communications’ Q3 Earnings

Verizon’s revenue rose 1.5% in the third quarter but would have fallen about 3% adjusted for the Frontier acquisition. Lower phone sales drove most of the decline as the firm deemphasizes upgrades and subsidies. Core wireless and broadband revenue increased about 0.4%, also adjusted for Frontier.

Why it matters: Results this quarter were solid, lifting Verizon shares nearly 4% following the report. In our view, Verizon’s momentum with wireless customers is the strongest in a decade, and efficiency gains have driven impressive cash flow. However, the market remains heavily focused on SpaceX’s potential entry into the wireless business.

• The pace of wireless customer defection, or churn, remains a weakness but showed modest improvement year over year. We expect churn will gradually improve as more customers move to new lower-cost rate plans, which have done a good job of attracting new wireless accounts.
• Management again claimed it has no interest in signing a wholesale wireless network agreement with SpaceX, while defending its ability to compete if SpaceX chooses to build a network. Our base case is that SpaceX does not build a terrestrial network intended to serve the wireless market.

The bottom line: We maintain our $54 fair value estimate and Narrow Morningstar Economic Moat Rating.

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.

We expect Verizon to gradually lose postpaid wireless market share. With a rational competitive environment and stable service pricing, we expect revenue per postpaid customer to grow modestly but steadily over the long term.

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. Offsetting this growth, the television and phone businesses will likely continue to decline, but this drag is diminishing.

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 and the difficulty of providing a differentiated wireless offering create an efficient scale advantage in the wireless industry.

Satellite presents 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.

Read more about Verizon Communications’ economic moat.

Financial Strength

Verizon’s balance sheet is in decent shape, but we would prefer the firm place a heavier emphasis on maintaining strong credit metrics.

Net debt stood at $162 billion at the end of the third quarter of 2026, putting net leverage at about 3.0 times normalized EBITDA. The firm expects net leverage to return to its target by 2027, but we would prefer it 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

We recently raised our Uncertainty Rating to High from Medium, as SpaceX continues to threaten to enter the US wireless market. Verizon primarily faces regulatory and technological uncertainties, as well as the potential for irrational competition. SpaceX embodies all three, as it has developed new communications technologies, successfully lobbied regulators, and amassed the resources to compete aggressively in traditional telecom markets if it chooses.

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, regulators or politicians could step in.

Read more about Verizon Communications’ risk and uncertainty.

VZ Bulls Say

• Verizon’s network focus has given it broad wireless coverage and a sterling reputation with most customers. Shifting pricing in line with rivals will allow it to retake share.
• With the largest customer base in the US, Verizon is the most efficient carrier in the industry, delivering better profitability than rivals. Combined with a growing fiber footprint, the firm can also offer attractive service bundles.
• 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 past 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 Colin Laidley.