Is Verizon Stock A Real Bargain?

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Verizon Communications (VZ) stock trades at 11.6 times earnings, roughly half the 23.2 times multiple of the median S&P 500 company. The stock sits at that level after returning 19.6% over the past year, compared with 15.1% for the S&P 500. This discount could mean a sound phone and broadband business is on sale, or it might just be a fair price for a company whose profits have been slipping. So what does a buyer actually get for that low multiple?

Verizon Buyers Get Plenty Of Cash, But Little Growth

A buyer gets a large stream of cash from a business that is barely growing. Verizon produced $20.2 billion of free cash flow over the four quarters ended June 2026. At today’s price, this means every $10,000 of its stock stands for about $1,070 of yearly free cash flow. Much of that cash goes back to owners: the dividend yields 6.2% at the latest close, and management raised its 2026 buyback target to up to $4.5 billion in July.

Growth is what the price does not buy. Revenue rose 1.4% over those four quarters, compared with 8.5% for the median S&P 500 company. The Consumer segment, the larger of Verizon’s two main businesses, brought in $107 billion in fiscal 2025 and grew 3.8% that year.

Verizon’s Profit Margin Has Fallen Four Years Running

Verizon’s operating margin is still higher than the median S&P 500 company’s, at 20.5% against 18.7%, but it has been shrinking. Its operating margin was 23.7% over the twelve months to June 2022. The margin has fallen in each twelve-month period to June since, reaching 20.5% in 2026. Only one quarter end since 2016 shows a lower twelve-month margin.

Verizon’s recent sales look better than its recent profit. Sales growth of 1.4% over the latest twelve months beats the average of about 1.0% across the three twelve-month periods ended June 2024, 2025 and 2026. The operating margin went the other way, ending below its three-period average of 21.3%. Net income, the earnings behind the P/E, fell to $16.2 billion from $18.2 billion a year earlier.

The weak spot is the Business segment, which shrank 1.6% in fiscal 2025 after a 2.0% fall in fiscal 2024. In the second quarter of 2026, wireless service revenue also declined 0.7% from a year earlier, management said. That is a different measure from the mobility and broadband service revenue discussed below. On top of that, Verizon carries debt equal to its entire market value, against 19.7% of market value for the S&P 500 taken as one company.

What Verizon Is Doing To Grow Again

Management is pushing growth in phone and broadband service while cutting costs. Mobility and broadband service revenue grew 2.8% in the second quarter of 2026, up from 1.6% in the first, management said. In July, management raised its full-year 2026 guide for that revenue to 2.5% to 3%, the upper half of its earlier range. It expects about 4% growth in the fourth quarter. Management also says Verizon is on track to deliver at least $9 billion of operating and capital spending savings.

Buying at this price is a bet that Verizon fixes a real problem: that faster service growth and those savings lift its margin again. It is not a bet that the market has overlooked a sound business. When Verizon reports in October 2026, the measure to watch is mobility and broadband service revenue growth against management’s guide of growth approaching 3% for the third quarter of 2026.

Is Too Much Of Your Wealth Riding On One Stock?

Whether Verizon Communications is a bargain will take time to find out. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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