Verizon Rises 9.6% YTD: Should You Add VZ Stock to Your Portfolio Now?

Verizon Communications Inc. VZ has gained 9.6% in the year-to-date period compared with the Wireless National industry’s growth of 12.7%. The stock has also outperformed the Zacks Computer & Technology sector and the S&P 500 during this time period.

The company has underperformed its peers like AT&T Inc. T and T-Mobile US, Inc. TMUS. AT&T has gained 22.8%, while T-Mobile has increased 10.4% during this period.

VZ Rides on Strong Network Coverage, Broadband Expansion

Verizon is steadily building the entire network infrastructure and ecosystem to provide the most amazing 5G experience to customers. It holds a total of 2,035 MHz of spectrum with the acquisition of C-band spectrum – 294 MHz in Sub 6 GHz spectrum (low and mid band) and 1,741 MHz of mmWave spectrum (high band). The C-Band spectrum facilitates greater speed and coverage for 5G networks and paves the way to provide differentiated 5G Ultra Wideband service to millions of customers. The company’s mmWave infrastructure offers highly predictable signal waves, leading to greater efficiency and less interference even in the densest parts of the network.

The company has accelerated its broadband expansion initiatives in recent quarters. It is witnessing solid growth in fixed wireless subscriber backed by growing popularity of premium plans and perks. It is also expanding its traditional Fios fiber network. The strategy led to 339,000 broadband net adds during the first quarter. Backed by strong momentum the company has projected to reach 8-9 million fixed wireless access by 2028.

The acquisition of Frontier Communications is expected to accelerate expansion of Verizon’s fiber footprint nationwide. Frontier boasts 2.2 million fiber subscribers across 25 states in the United States. The integration of Frontier state of art fiber network with VZ’s Fios network will significantly boost Verizon’s capability to provide broadband services to current and new customers. 

Verizon is offering bundled wireless and broadband services as a part of its convergence strategy. This approach is expected to improve consumer’s stickiness and reduce churn. Verizon Value Guarantee, which offers three-year price lock guarantee for all its myPlan and myHome network plans, is resonating well with both existing customers and new customers. The company is also investing in AI driven customer service improvement to augment customer retention and boost brand loyalty.

Major Challenges for VZ

During the past few months, the company witnessed a slow growth in postpaid phone net adds and high churn due to price hikes. This shows how saturated and price sensitive the market is. Intensifying competition with other established players such as AT&T and T-Mobile in market with relatively fixed pool of customers are weighing on margin. AT&T is witnessing fiber customer addition backed by its integrated fiber expansion strategy focused on improving the broadband connectivity for both enterprise and consumer markets. This is further escalating the competition in the fiber broadband market.

Verizon is recording high capital expenditures to 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. Amid highly competitive pressure and pricing challenges such high capex is further creating a margin squeeze.

As of the first quarter of 2025, Verizon’s current ratio stands at 0.61, lower than the year-ago quarter's 0.71. A current ratio of less than 1 indicates that the company does not have the resources to cover its short-term obligations.

Estimate Revision Trend of VZ

Earnings estimate for 2025 has remained stable at $4.69 over the past 60 days, while the same for 2026 has remained unchanged at $4.86.

Key Valuation Metric of VZ

From a valuation standpoint, VZ appears to be trading relatively cheaper compared to the industry but trading above its mean. Going by the price/earnings ratio, the company shares currently trade at 9.2 forward earnings, lower than 13.73 for the industry but above the stock’s mean of 8.94.

End Note

Verizon is doubling down on its customer first strategy with greater emphasis on customer retention. Continuous investment in broadband and 5G expansion, converged service offerings, strategic acquisitions and customer centric innovation strategies are major growth drivers.

However, fierce competition and highly price sensitive market remain a major obstacles to revenue growth. Despite healthy cash flow elevated debt risk remain a concern for investors. 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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