Verizon Shares Jump on Strong Subscriber Growth and Buyback. Is It Too Late to Buy the Stock?

In October, new Verizon (NYSE: VZ) CEO Daniel Schulman said the company was going to make a fundamental strategy shift after continuing to lose wireless customers, saying it would move to a more customer-focused approach from a technology-centric one.

It didn't take long for this new tactic to pay off, with the company seeing its highest quarterly net subscriber additions since 2019.

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Strong subscriber growth

During the quarter, Verizon added 1 million net subscribers, including 616,000 postpaid phone subs. It also added 372,000 broadband net additions, including 319,000 fixed wireless subs and 67,000 Fios households.

Verizon's overall revenue rose 2% year over year to $36.4 billion, with service revenue edging up 0.1% to $28.2 billion and wireless equipment revenue climbing 9.1% to $8.2 billion.

Consumer revenue increased by 3.2% year over year to $28.14 billion, with service revenue up 0.9%. The company's business unit continued to lag, with revenue decreasing by 1.8% year over year to $7.4 billion, as wireline customers continue to churn off.

Overall adjusted EPS slipped by 0.9% to $1.09, while earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 0.6% to $11.9 billion.

Looking ahead, Verizon projected it would add between 750,000 to 1 million postpaid phone subscribers in 2026. It is looking for mobility and broadband service revenue to rise between 2% to 3%, and for adjusted EPS to climb by 4% to 5% to between $4.90 and $4.95.

Verizon also announced a huge $25 billion buyback to be completed over the next three years, while reiterating its commitment to its dividend. This will be backed by its strong free cash flow, which the company sees climbing by 7% next year to $21.5 billion. At the same time, it plans to keep its unsecured leverage (net unsecured net/adjusted EBITDA) between 2 times and 2.25 times to maintain its balance sheet strength.

Is it too late to buy the stock?

Verizon has decided it will no longer be the wireless company that others steal customers from, and its net additions in Q4 were impressive. Meanwhile, with the closing of the acquisition of Frontier Communications, Verizon has a big cross-selling and bundling opportunity in front of it.

The dividend looks secure, being well covered by Verizon's free cash flow, while the buyback should help lend support to its lagging stock price. Even after the stock's post-earnings jump, it still trades at a forward price-to-earnings (P/E) ratio of 9.2 times based on 2026 earnings estimates, compared to an 11.3 times multiple for rival AT&T. With a 6.5% forward yield, Verizon is a solid dividend stock to still buy.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.