Does VZ's Solid Q4 Earnings Performance Warrant a Portfolio Re-Look?

Verizon Communications Inc. VZ reported solid fourth-quarter 2025 results, with both adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate on healthy mobility and broadband demand trends. The company registered solid broadband growth with total fixed wireless access net additions of 319,000, which increased the subscriber base to nearly 5.7 million. The company remains well poised to achieve its target of 8-9 million fixed wireless access subscribers by 2028.

VZ Riding on Fiber Assets

Verizon appears to be at a critical inflection point and remains focused on making necessary capital expenditures due to the continued expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network to cater to huge traffic demands across multiple verticals and the continued deployment of the fiber infrastructure.

The acquisition of Frontier Communications Parent, Inc., the largest pure-play fiber provider in the United States, has extended Verizon’s fiber footprint across the country and enabled it to deliver premium mobility and broadband services to customers. Verizon has integrated Frontier’s state-of-the-art fiber network within its Fios network to boost its industry-leading portfolio of fiber and wireless assets. Additionally, the combination of Frontier’s premium broadband with Verizon’s premium mobile offering is anticipated to improve the customer churn rate by approximately 50% for postpaid mobility. This, in turn, is likely to boost the revenues of the mobility division.

Wireless Broadband Momentum Buoys VZ

Verizon has introduced premium unlimited plans that are translating into significant 5G adoption and fixed wireless broadband momentum. The company is aiming to deploy an extensive 5G Ultra Wideband network across the country, driven by a relentless focus on 5G mobility, nationwide broadband and mobile edge compute and business solutions. 

The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These are massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

VZ Plagued By Depleting Margins, Eroding Legacy Services

Despite solid wireless traction, Verizon is facing a steady decline in legacy services. In a bid to expand its customer base, it is spending heavily on promotion and is also offering lucrative discounts, which are weighing on margins. Verizon has announced a three-year price lock guarantee for all its myPlan and myHome network plans. This ensures that the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. The hassle-free enrollment for the changeover is being done automatically for all existing users and is reset for the next three years each time myPlan is changed. Although the customer-first strategy is designed to woo new customers and retain existing ones, it is likely to contract margins. 

VZ also recorded high capital expenditures to support the launch and continued build-out of its 5G Ultra Wideband network, deployment of significant fiber assets across the country, and upgrade to Intelligent Edge Network architecture. The company operates in a competitive and almost saturated U.S. wireless market. Spectrum crunch has become a major issue in the U.S. telecom industry. Most carriers are finding it increasingly challenging to manage mobile data traffic, which is growing by leaps and bounds. The situation has become even more acute with the growing popularity of iPhone and Android smartphones, as well as rising online mobile video streaming, cloud computing and video conferencing services. 

Price Performance

Verizon stock has surged 11.6% in the past year against the industry’s decline of 4.9%. It has outperformed peers like AT&T Inc. T and T-Mobile US Inc. TMUS over this time frame. While AT&T has gained 8.4%, T-Mobile declined 18.1%.

One-Year VZ Stock Price Performance

Estimate Revision Trend of VZ

Earnings estimates for Verizon for 2026 have moved down 1.8% to $4.79 over the past year, while the same for 2027 has increased 2.2% to $5.10. The mixed estimate revision depicts that investors are skeptical about the stock’s growth prospects. 

End Note

By investing steadily in fiber infrastructure and pioneering new technologies, Verizon is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. In addition, the company is likely to benefit from the deployment of a cloud-native, container-based, virtualized architecture for higher flexibility, scalability and cost efficiency across its network. The various mix-and-match pricing plans for wireless and home broadband have further led to solid customer additions. 

However, high capital expenditures due to the continued expansion of 5G mmWave in new and existing markets, the densification of the 4G LTE wireless network and the deployment of the fiber infrastructure are likely to have eroded margins. An ongoing shift from traditional linear video to over-the-top offerings, along with a competitive and almost saturated U.S. wireless market, is expected to weigh on the company’s revenues in the future. Moreover, Verizon is likely to be affected by the demand softness in the Business Segment. The mixed bag of estimate revisions further portrays skepticism about the stock’s growth potential. Consequently, it might be prudent to avoid the stock now.

Verizon carries a Zacks Rank #4 (Sell). 

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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