Verizon Trades at 12x Earnings with 1.0% Growth
Verizon offers a 10.4% free cash flow yield and lowered customer churn, despite slow revenue expansion and a recent price drop.
Key points
- Verizon trades at 12 times earnings, significantly below the S&P 500 median of 22.4 times.
- Three-year average annual revenue growth is 1.0%, trailing the S&P 500 median of 8.3%.
- Free cash flow yield stands at 10.4%, supported by a 20.5% operating margin.
Verizon Communications reports a 12x earnings multiple, well below the S&P 500 median of 22.4. This discount reflects a 1.0% three-year revenue growth rate, far behind the 8.3% market average.
The stock returned 14.1% over the last year, lagging the index’s 17.9% gain. Management has raised 2026 guidance in two consecutive quarters, signaling confidence in the current operational trajectory.
Cash Flow Strengths Drive Valuation
Verizon generates positive free cash flow in every twelve-month period for three years. The 10.4% free cash flow yield anchors the investment case for value-focused buyers.
Operating margin reached 20.5% over the last year, exceeding the S&P 500 median of 18.6%. Net unsecured debt stood at 2.5 times consolidated adjusted EBITDA at the end of Q2 2026.
Slow Growth Limits Upside Potential
Revenue grew only 1.4% in the last twelve months. The three-year average annual growth of 1.0% indicates a settled pattern rather than a temporary dip.
Consumer postpaid phone churn fell to 84 basis points in Q2 2026 from 90 in Q1. Broadband net additions reached 348,000, split between fixed wireless access and fiber connections.
New Pricing Strategy Tests Margins
A new plan launched in mid-June 2026 removed activation and upgrade fees. This move separates phone subsidies from wireless pricing, aiming to improve long-term margins despite lower immediate revenue.
Operating margin thinned by about one percentage point over the last year. Verizon signed a fiber deal worth over $1 billion, with revenue expected to contribute starting in 2027.
