Why Does AT&T Stock Cost Less Than A Slower-Growing Verizon?
AT&T (T) grows faster than Verizon, yet it trades at a far lower multiple of earnings. In its five-company peer group it ranks second on growth and margin but only third on its earnings multiple. Management calls that a disparity, and it has raised its buyback to take advantage of it.
How Can AT&T Out-Grow Verizon And Still Trade Cheaper?
Over the last twelve months AT&T grew revenue 2.6% and Verizon 1.4%, and both earned an operating margin just over 20%. Verizon trades at 12.4 times earnings, AT&T at 8.2 times. A buyer pays about half again as much for a dollar of Verizon’s profit.
| T | VZ | TMUS | CMCSA | CHTR | |
|---|---|---|---|---|---|
| Market Cap ($ Bil) | 176.2 | 200.4 | 181.9 | 81.0 | 15.4 |
| PE Ratio | 8.2 | 12.4 | 17.2 | 7.2 | 3.1 |
| LTM Revenue Growth | 2.6% | 1.4% | 9.7% | 0.6% | -1.5% |
| LTM Operating Margin | 20.6% | 20.5% | 20.1% | 14.7% | 23.8% |
| 12M Stock Return | -10.0% | 16.2% | -28.3% | -21.7% | -52.2% |
Rank the five by revenue growth and by earnings multiple, and the two lists match except that AT&T and Verizon swap places. Comcast and Charter trade below AT&T, but Comcast’s revenue barely grew and Charter’s shrank.
Investors have rewarded the slower grower. Over the past twelve months Verizon’s stock returned 16.2%, while AT&T’s lost 10.0%. AT&T’s stock has started to recover, up 16.9% over the past three months.
Where Is AT&T’s Growth Coming From?
The growth comes from Advanced Connectivity, the fiber and wireless segment that contributes over 90% of service revenue. That segment’s service revenue grew 5.1% year over year in the second quarter of 2026. Legacy service revenue fell 26% in the same quarter as AT&T powers down its old copper network.
The engine is selling home internet and wireless to the same customer. At the end of the second quarter of 2026, 42.5% of AT&T’s advanced home internet customers also had a postpaid wireless account with it. Management says these converged customers churn less and are worth more over their lifetime. AT&T is running the same play in the fiber footprint it bought from Lumen.
That growth has a price. Converged customers get discounted pricing, and excluding the lower-paying Lumen customers, fiber revenue per user was about flat year over year in the second quarter of 2026. Counting them, it fell 1.3%, and management expects more near-term pressure.
What Does AT&T Have To Deliver To Close The Gap?
Free cash flow is the scoreboard. Management expects $18 billion or more in 2026, rising to about $21 billion in 2028. Buybacks of about $10 billion plus dividends total about $18 billion, essentially all of the 2026 amount.
The 2026 buyback is up from an $8 billion plan for the year, and management calls it a pull-forward of buybacks planned through 2028. In July 2026, management said it expected the EchoStar spectrum purchase to push net debt to around 3.2 times adjusted EBITDA once the deal closed, then to bring it back to about two and a half times within roughly three years.
So you are being asked to believe that fiber and wireless growth turns into the promised cash while leverage falls back toward two and a half times and nearly every spare dollar goes to shareholders. If it does, the discount to Verizon looks like the market’s mistake. If cash falls short, little is left to protect the balance sheet. To judge AT&T on more than one number, our scorecard ranks every stock on growth, profitability, stability, resilience, and valuation.
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