VZ Stock Declines 6.1% in Past Six Months: Should You Buy the Dip?

Verizon Communications Inc. VZ has declined 5.6% in the past six months compared with the Wireless National industry’s decline of 9.4%. The stock has underperformed the Zacks Computer & Technology sector and the S&P 500 during the same time frame.

Shares of the company have outperformed its peers like AT&T Inc. T and T-Mobile US, Inc. TMUS. Shares of AT&T and T-Mobile have declined 7.1% and 13.9%, respectively, during this period.

Major Challenges for VZ

Verizon operates in a highly competitive and saturated U.S. telecom market. Growing competition from other industry leaders such as Comcast, T-Mobile and AT&T is affecting growth. 

During the third quarter, Verizon Business segment reported revenue of $7.14 billion, down 2.8% year over year. The decline was due to soft demand in enterprise and public sector verticals induced by macroeconomic headwinds. During the quarter, the company recorded a wireless retail postpaid churn of 1.56%, while retail postpaid phone churn was 1.25%. High churn reflects competitive pressure and weak customer retention.

In order to gain a competitive edge and retain users, Verizon is spending heavily on promotion and is also offering lucrative discounts. The company is facing promo amortization headwind, and this is expected to continue in the upcoming quarters.

As of Sept. 30, 2025, the company had $7.71 billion in cash and cash equivalents with $126.63 billion of long-term debt. The company’s debt-to-capital ratio is 58% compared to the industry’s 54.8%. The telecom industry is capex-heavy, requiring significant investment in network upfront. Verizon’s high debt obligation can limit its ability to invest in growth initiatives. As of the third quarter of 2025, its current ratio is 0.9. A current ratio of more than 1 suggests the company might face difficulties in fulfilling its short-term debt obligations. 

The company reported a postpaid phone net loss of 7,000. During the third quarter, Verizon registered 70,000 Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings.

VZ Rides on Strength in Consumer Segment, Network Expansion

Verizon is witnessing healthy demand trends in the Consumer segment. During the third quarter, VZ service revenues were up 2.1% to $20.34 billion, while wireless equipment revenues improved 6.4% to $4.77 billion. The company recorded 306,000 broadband net additions in the quarter. 

The company has taken a multi-faceted approach to expand its network footprint nationwide. It has inked a long-term agreement with SBA Communications that will support the expansion of Verizon’s industry-leading 4G and 5G services. SBA’s industry-leading tower portfolio will allow VZ to efficiently manage its network portfolio and deliver a secure and high-quality connection to customers.

Verizon has also inked a commercial fiber agreement with Eaton Fiber LLC to accelerate its broadband and mobility convergence strategy. The agreement will expand Verizon’s premium broadband offering, complementing its ongoing fiber builds and planned acquisition of Frontier. Such initiatives are expected to drive long-term growth.

Verizon has also secured several customer wins in the last couple of months. Amazon Web Services is collaborating with Verizon Business to deploy robust and resilient connectivity infrastructure for its data centers. Verizon Business has also recently completed the deployment of a 100G dedicated optical ring at Monumental Sports & Entertainment. World’s leading auditing firm KPMG is also collaborating with Verizon to deliver connectivity in its new Manhattan headquarters. Such customer wins bode well for sustainable growth.

Estimate Revision Trend of VZ

Earnings estimates for 2025 have remained unchanged over the past 60 days, while the same for 2026 have declined 1.22% to $4.86.

Key Valuation Metric of VZ

From a valuation standpoint, VZ appears to be trading relatively cheaper compared to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.37 forward earnings, lower than 12.04 for the industry.

End Note

Growing 5G adoption and fixed wireless momentum are major growth drivers for Verizon. Its plans to accelerate the availability of 5G ultra-wideband network nationwide which will likely drive customer addition in the long run. Investment in network expansion and strategic acquisition to strengthen the portfolio is positive.

However, high churn rate remains a concern. Stiff competition and high spending on promotion for customer acquisition are putting pressure on margin. High debt burden remains 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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This article originally published on Zacks Investment Research (zacks.com).

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