Can Verizon Communications (VZ) Still Trade At A Discount To Fair Value?
Verizon Communications stock has put in a solid three year run while the broader valuation checks point to a mixed picture rather than a clear bargain or clear premium.
- Over the last 3 years Verizon Communications has returned 73.8%, which puts more focus on whether the current price already reflects much of the good news.
- Announcements around fiber expansion partnerships and new 5G based services can support longer term earnings power, while fresh competitive pressure from SpaceX’s planned Starlink Mobile offering may weigh on how much investors are willing to pay for those cash flows.
- Verizon Communications scores 4 out of 6 on valuation checks, which suggests the stock looks neither clearly cheap nor clearly expensive on the broader set of metrics.
The issue now is whether Verizon Communications’ recent share price strength still leaves enough valuation upside to appeal to new investors.
Is Verizon Communications a Bargain on Earnings?
The P/E ratio is a useful way to look at Verizon Communications because earnings remain a central lens for how telecom investors compare large carriers. Verizon Communications currently trades on about 12.1x earnings, which is below both the wider Telecom industry average of roughly 17.0x and the peer group average of about 9.8x.
The Fair Ratio model points to a P/E of about 15.5x for Verizon Communications once its margins, scale, sector and risk profile are taken into account. That is several turns higher than the current 12.1x multiple, which implies the stock price does not fully reflect what this framework suggests investors might be willing to pay for its earnings. Despite the overhang from SpaceX’s Starlink Mobile plans announced for 2027, the stock still trades at a discount to this tailored P/E benchmark.
On this P/E yardstick, Verizon Communications stock appears undervalued compared with what the Fair Ratio model implies investors might expect to pay for its earnings power.
See what the numbers say about this price — find out in our valuation breakdown.
The Verizon Communications Narrative: What Would Justify Today's Price?
Simply Wall St Narratives for Verizon Communications pick up where the valuation checks leave off. They spell out which future paths for Verizon Communications' growth, margins and earnings would need to play out for the stock to be worth materially more or less than today's price on the market, and sit on the company's Community page for you to review. Where a single ratio or model gives one figure, these narratives describe the future conditions that number rests on so you can monitor whether they continue to hold.
The community is split on Verizon Communications, with one side focused on execution upside and the other on capital strain and competitive threats.
Bull case: 9% undervalued
"The rapid expansion of fixed wireless access (FWA) and fiber broadband, as evidenced by accelerating subscriber growth (5M+ FWA subscribers, robust broadband net adds, and the pending Frontier acquisition), positions Verizon to capitalize on surging demand for high-quality home and business connectivity as more devices, smart homes, and bandwidth-intensive applications proliferate, supporting future service revenue and ARPU growth…"
Read the full Bull Case to see why Verizon Communications could be undervalued
Bear case: 7% overvalued
"The plan to reach 40 million to 50 million fiber passings over the medium term, including at least 2 million new passings in 2026 and continued fixed wireless access expansion, could require sustained heavy capital and integration spending that constrains revenue growth if broadband demand or pricing do not keep pace, which could pressure free cash flow and earnings…"
Read the full Bear Case to see why Verizon Communications could be overvalued
Do you think there's more to the story for Verizon Communications? Head over to our Community to see what others are saying!
The Bottom Line
For investors looking at Verizon Communications today, the key question is whether the current discount on its earnings multiple is a genuine opportunity or simply a reflection of the capital and competitive risks already highlighted. The market-multiple view points to Verizon Communications as modestly undervalued, yet the broader valuation checks sit in mixed territory rather than clearly cheap. That leaves the crux of the debate on one issue. It comes down to whether Verizon Communications can grow earnings and cash flow enough from fiber and 5G services to justify a higher P/E without being pulled back by heavy investment needs and new rivals like Starlink Mobile.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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