Does Verizon Offer Hidden Value After 5G Rollout Investments in 2025?

• Whether Verizon Communications at around $40.89 is quietly offering value, or the market already fully appreciates this telecom giant, many investors are asking if now is the right time to buy, hold, or move on.
• Despite some recent choppiness, with the stock down 1.0% over the last week and 0.4% over the last month, Verizon is still up 1.7% year to date and 6.9% over the past year. Its 3 year return of 35.1% and 5 year return of 7.3% may look more mixed depending on your time horizon.
• Recent headlines around network investments, competitive 5G rollout, and shifting consumer wireless plans have kept Verizon in the spotlight and helped shape investor sentiment. At the same time, ongoing discussions about telecom competition, capital intensity, and dividend sustainability have added nuance to how the market is pricing the stock.
• On our checklist of six valuation tests, Verizon scores a 4 out of 6, suggesting it looks undervalued on several important measures, but not all of them. Next, we will walk through those valuation approaches in detail and, by the end of the article, introduce an even more powerful way to think about what Verizon might really be worth.

Find out why Verizon Communications's 6.9% return over the last year is lagging behind its peers.

Approach 1: Verizon Communications Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in $ terms.

For Verizon Communications, the latest twelve month Free Cash Flow is about $17.0 billion. Analysts expect this to rise steadily, with projections moving into the low to mid $20 billion range over the next decade, reaching roughly $28.1 billion by 2035 as Simply Wall St extrapolates beyond the initial analyst forecast window.

When those future cash flows are discounted back to today using a 2 Stage Free Cash Flow to Equity model, the estimated intrinsic value comes out at about $99.93 per share. Against the recent share price near $40.89, the DCF suggests Verizon is trading at a 59.1% discount to its calculated fair value and this implies meaningful upside if those cash flow assumptions are broadly correct.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Verizon Communications is undervalued by 59.1%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Verizon Communications.

Approach 2: Verizon Communications Price vs Earnings

For profitable companies like Verizon Communications, the Price to Earnings, or PE, ratio is a practical way to gauge how much investors are paying today for each dollar of current earnings. In broad terms, faster growth and lower perceived risk usually justify a higher, or more generous, PE multiple, while slower growth or higher risk tend to pull a fair PE lower.

Verizon currently trades on a PE of about 8.7x. That sits slightly above the peer average of roughly 8.2x, but well below the broader Telecom industry average of around 16.2x. This suggests the stock is cheaper than many industry names despite its scale and entrenched position. Simply Wall St also calculates a proprietary Fair Ratio for Verizon of about 13.9x. This represents the PE you might reasonably expect once factors like earnings growth, profit margins, risk profile, industry, and market cap are all taken into account.

This Fair Ratio is more tailored than simple peer or industry comparisons because it blends company specific fundamentals with sector context instead of assuming all telecom stocks deserve similar multiples. With Verizon trading at 8.7x versus a Fair Ratio of 13.9x, the multiple based view points to the shares being undervalued.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Verizon Communications Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple but powerful feature on Simply Wall St’s Community page. It lets you attach a story, your view of Verizon’s future revenue, earnings and margins, to a financial forecast and then to a fair value. You can then compare that fair value to today’s share price and decide whether it looks like a buy, hold or sell. The platform keeps your Narrative dynamically updated as new news, earnings or guidance arrives. Some investors currently build optimistic Narratives for Verizon with fair values closer to the most bullish analyst target around $58. More cautious investors, focused on debt, competition and execution risk, lean toward Narrative fair values nearer the low end of analyst expectations around $42. This shows how the same company can lead to very different but clearly quantified decisions.

Do you think there's more to the story for Verizon Communications? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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