Verizon Stock: Cheap Multiple, Complicated Story

Verizon (VZ) looks like a mathematical anomaly. Trading at about 9.8x trailing earnings and a mere 8.7x FY’27 consensus, the stock is priced like a business in secular decline.

Yet, per share earnings are growing, and the forward multiple is contracting. This setup typically signals a buying opportunity, but there may be a lot more nuance for Verizon stock.

Postpaid Subs Sparked A 14% Rally, But There’s A Catch

Verizon stock is up 14% year-to-date, largely driven by Q4 2025’s headline figure of 616,000 postpaid phone net adds and a surprise 55,000 net adds over Q1 2026.

Skeptics argue those adds were the product of aggressive promotional spending, not a structural improvement in Verizon’s competitive position.

Matching competitor offers move-for-move comes at a cost: continuous hardware subsidies and “free” perks pressure margins over time.

Wireless retail phone churn already ticked higher to 0.97% in Q1 2026 up 2 basis points versus last year. This may be a sign that promotionally acquired customers are less sticky. For perspective, churn has been at sub-0.90% levels in prior years. If there is a pullback on the incentives to protect margins, subscriber growth likely returns to stagnant levels.

Another valuation debate is unfolding at Amazon. Is Amazon Stock Overvalued?

So Why Is EPS Actually Growing

Three factors explain the earnings growth despite a soft core business.

A $5 billion internal OpEx reduction program for 2026 is likely to flow directly to the bottom line. Headcount reductions, real estate consolidation, and decommissioning legacy network equipment are all contributing. On flat revenue, removing $5 billion in costs produces a significant and immediate lift to net income.

With the 5G build-out largely complete, capital expenditure is also declining toward $16 billion annually. That frees up cash to fund the Frontier deal without material balance sheet strain. A $25 billion buyback program further supports EPS, though it does nothing to fix the underlying growth problem. See how Verizon’s growth and margins compare to peers such as AT&T (T) and T-Mobile (TMUS)

The Frontier acquisition adds a third layer. Verizon is targeting $1 billion in annual cost reductions by 2028 by eliminating redundant corporate layers and integrating Frontier’s fiber onto its existing backhaul. That converts Frontier’s previous net losses into Verizon’s net gains.

Cost-Cutting Is Not A Growth Strategy

Cost-cutting and buybacks are finite levers. Every year of OpEx reductions brings Verizon closer to the point where further cuts start impairing operations rather than improving efficiency. If the core wireless business does not return to organic growth, there are no more costs left to cut. That risk is compounded by a saturating wireless market, which makes a subscriber-led recovery increasingly difficult to count on. There is the broadband business, though. Verizon’s broadband business, which has been expanding, is led by its fiber optic transformation strategy and growth of the fixed wireless access business. Still, the business too faces its own headwinds. Satellite-based broadband offerings such as Starlink and Amazon Kuiper are already limiting the growth ceiling for rural fixed wireless access, a segment Verizon had been counting on as a primary driver of broadband expansion.

For investors seeking exposure to Verizon’s turnaround thesis without taking a concentrated single-stock position, the broader question is how to capture that upside while managing execution risk.

The Trefis HQ strategy offers one such approach, having outperformed its blended benchmark (S&P 500, S&P MidCap, and Russell 2000) with over 105% returns since inception. Why did HQ outperform? See HQ performance metrics with five reasons why – for the full story.