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Verizon Gains 6.5% in Six Months: Should You Invest in VZ Stock?

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Key Takeaways

  • Verizon gained 6.5% in six months, outpacing the industry and sector but trailing its major competitor T.
  • 5G, fiber network expansion, customer focused approach and collaboration with retail chain are driving growth.
  • Heavy spending and intense competition challenge Verizon's long-term margins.

Verizon Communications Inc. (VZ - Free Report) has gained 6.5% in the past six months compared with the Wireless National industry’s growth of 2.3%. The stock has also outperformed the S&P 500 index during this time period.

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The company has underperformed its peers like AT&T Inc. (T - Free Report) but outperformed Charter Communications (CHTR - Free Report) . Shares of AT&T have gained 10.8%, while Charter shares have declined 27.6% during this period.

VZ’s Key Growth Drivers

Verizon is benefiting from solid momentum in wireless verticals. During the second quarter, the wireless service revenue grew 2.2% year over year to $20.9 billion. The wireless equipment revenue was up by 25.2% year over year to $6.3 billion. The company continues to gain broadband market share with best-in-class fixed wireless access and Fios offerings. Verizon’s broadband net adds were 293K, while fixed wireless access net additions were 278K. 

Verizon’s multi-dimensional strategy is driving steady user growth. It is doubling down on fiber broadband expansion across the country. The acquisition of Frontier Communications is set to add 2.2 million fiber customers across 25 states. Verizon’s broadband connections surged 12.2% year over year to 12.9 million during the quarter.

Verizon has been undertaking several steps to augment its brand visibility. The company has formed a strategic collaboration with retail chain Staples. Under this partnership, Verizon Kiosks will be rolled out across 35 Staples stores across key U.S. markets. These kiosks will offer various services such as setting up reliable Internet in customer's home and businesses, free tech consultation, device upgrades and more. 

Verizon has steadily expanded its retail footprint over the past few years. But the recent moves suggest that it’s now diversifying its traditional setup of Verizon retail stores. The collaboration with Staples will enable Verizon to tap into Staple’s core customer base, which is small businesses. Such initiatives to boost brand visibility and accessibility among customers augur well for long-term growth.

Key Challenges for Verizon

Verizon has splurged in the C-Band auction, which is offering airwaves in the 3.7 gigahertz-to-4.2 gigahertz area of spectrum to acquire key mid-band spectrum for potential 5G deployments in the next few years. The company also recorded high capital expenditures in order to support the deployment of significant fiber assets across the country and upgrade to the Intelligent Edge Network architecture. It remains unclear if and when a reasonable return can be achieved from such investments.

The intensely competitive and highly saturated nature of the U.S. wireless market is driving up the customer acquisition costs. In a bid to expand its customer base, Verizon is spending heavily on promotion and is also offering lucrative discounts, which are weighing on margins. During the second quarter of 2025, Verizon registered 62,000 Fios Video net losses. This is worrisome.

Other prominent players like AT&T and Charter are also doubling down on fiber network expansion. Charter has pledged to invest $7 billion to add 100,000+ miles of fiber-optic network infrastructure. The company intends to deliver multigigabit and symmetrical Internet services across 1.7 million locations. AT&T is set to acquire Lumen's fiber connectivity business for $5.75 billion. Following the completion of the buyout, AT&T will acquire 1 million fiber customers and 4 million fiber locations across 11 U.S. states. Such initiatives from competitors are expected to bring significant challenges to Verizon’s fiber expansion initiatives.

Estimate Revision Trend of VZ

Earnings estimate for 2025 has increased 0.21% to $4.7 over the past 60 days, while the same for 2026 has improved 1.44% to $4.93.

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Key Valuation Metric of VZ

From a valuation standpoint, VZ appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company’s shares currently trade at 8.91 forward earnings, lower than 13.48 for the industry but lower than the stock’s mean of 8.97.

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End Note

Verizon is expected to gain from solid demand for wireless services in the near term. The company’s strong focus on customer service and the launch of innovative AI-powered solutions are driving customer growth. Growth in free cash flow highlights efficient capital management. Upward estimate revision underscores growing investors’ confidence. Strong operational execution, combined with favorable tax reforms, is a tailwind for Verizon in 2025.

However, growing competition in the wireless market continues to weigh on margins. Macroeconomic headwinds remain a concern. With a Zacks Rank #3 (Hold), VZ appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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