Verizon Stock Is Up 10% This Year. Is It Still a Buy Ahead of Earnings?

Verizon Communications is set to release its third-quarter 2026 earnings report on Oct. 26. Here’s Morningstar’s take on what to look for in Verizon’s earnings and the outlook for its stock.

Key Morningstar Metrics for Verizon Communications

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

Verizon Communications Earnings Release Date

• Monday, Oct. 26, 2026, before the start of trading

What to Watch for in Verizon Communications’ Q3 Earnings

• Continued improvement in postpaid phone customer churn and net additions. Verizon set a goal of capturing 10%-15% of industrywide postpaid phone net customer additions in 2026, up from a low-to-mid single-digit percentage in recent years. The firm aims to achieve most of this improvement through lower customer defections (churn), and it has seen some improvement in this metric so far this year. But it still has a long way to go to get back to industry-leading levels.
• Stabilization in average revenue per customer and a continued decline in phone upgrade rates. Verizon has cut pricing to improve retention, but it has offset this with less generous phone upgrade offers. We think this shift was smart, moving pricing more in line with T-Mobile. If average revenue per customer takes another leg down, though, our view could change.
• Solid cash flow and debt reduction. Verizon has generated strong cash flow thus far in 2026, and we expect that to continue. The firm has started repurchasing shares rather than repaying debt, a move we think was premature given current leverage metrics. We’d like to see the firm shift its tone to emphasize debt reduction more explicitly, given the potential for an expensive spectrum auction in 2027.

Verizon shares are undervalued, in our view, but we would prefer T-Mobile among the major US wireless carriers. Verizon’s yield is nice, but we think T-Mobile’s lower dividend payout ratio of free cash flow and stronger balance sheet give it more flexibility amid elevated uncertainty around SpaceX.

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

Fair Value Estimate for Verizon Communications

With its 4-star rating, we believe Verizon Communications’ stock is moderately undervalued compared with our long-term fair value estimate of $54. Our estimate equates to roughly 7.6 times our 2026 EBITDA forecast, and implies a 9%-10% free cash flow yield.

We expect Verizon to gradually lose postpaid wireless market share to smaller rivals T-Mobile and AT&T as the firms’ shares slowly converge. With a rational competitive environment and stable service pricing, we expect revenue per postpaid customer to grow modestly but steadily over the long term.

Over the next five years, we expect average annual wireless service revenue growth of about 2%, with acceleration to 3% in 2028 after most customers move to new rate plans. 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.

Read more about Verizon Communications’ fair value estimate.

Economic Moat Rating

We assign Verizon a narrow economic moat, stemming 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 massive consolidation across the industry over the past 15 years and the inability of several interested parties to enter the market with their own networks provide evidence of efficient scale. We don’t believe building a terrestrial wireless network would be a rational financial decision for the industry’s latest threat, SpaceX, but it has very deep pockets and could choose to push forward anyway.

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. Net debt stood at $164 billion at the end of the second quarter of 2026, putting net leverage at about 3.2 times normalized EBITDA.

Management’s leverage targets now exclude debt secured by receivables and a partial credit for the equity component of its junior subordinated notes. The firm hopes to maintain unsecured leverage between 2.00 and 2.25 times EBITDA. On this basis, leverage currently stands at 2.5 times, up from 2.3 times a year ago.

The firm has started to repurchase 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

We’ve 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.

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. 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.

Wireless technology continues to evolve, enabling more efficient use of spectrum. Technology could eventually lower barriers to entry for firms that have long wanted to enter the business, including the large cable companies. Satellite technology could also improve to threaten both the wireless and broadband businesses.

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 United States, 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 Colin Laidley.