Verizon Shares Rise 20.6% in Three Months: How to Play the Stock

Verizon Communications Inc. VZ has gained 20.6% in three months compared with the Wireless National industry’s growth of 11.3%. The stock has outperformed the Zacks Computer & Technology sector during this time period.

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The company has outperformed its peers like AT&T Inc. T and T-Mobile US, Inc. TMUS. Shares of AT&T have gained 15.2%, while T-Mobile was at break-even during this period.

VZ Rides on Fiber Broadband Strength, Portfolio Diversification

Verizon is benefiting from solid broadband subscriber growth. In the last reported quarter, the company witnessed 372K broadband net adds. This includes 67K adds of Fios Fiber and 319K fixed wireless subscriber net adds. The trend shows broadband is becoming a key growth engine alongside mobility.

The company is rapidly expanding its fiber reach to build a national broadband platform. It has taken multiple approaches to realize this objective. VZ currently has 30 million fiber passings with a target of reaching 40-50 million fiber passings in the medium term. Verizon will add at least 2 million fiber passings in 2026. Alongside this organic fiber buildout, the company is also opting for strategic acquisitions to expand its fiber footprint.

In the first quarter of 2026, Verizon secured all the regulatory approvals needed to close the acquisition of Frontier Communications. The acquisition will boost Verizon’s reach across 31 states in the country. Along with fiber expansion, the acquisition also supports Verizon’s convergence strategy and brings several cross-selling opportunities.

Frontier customers will gain from Verizon’s premium mobility, home Internet, streaming and connected home offerings. Verizon’s wireless customers will have access to Frontier’s premium broadband offerings. VZ is set to launch enticing bundled mobile and home internet plans for customers. Users tied to multiple services are less likely to move away from their existing service provider. In a highly competitive and saturated U.S. telecom market, this prudent strategy for Verizon will likely improve churn rate.

To gain a competitive edge in the industry, Verizon is also focusing on diversifying its revenue base. It is venturing into the automotive market with innovative product launches such as Edge Transportation Exchange. This is a state-of-the-art mobile-network vehicle-to-everything (V2X) communication platform for connected vehicles. Such a strong focus on innovation and expansion into other emerging markets bodes well for sustainable growth.

Key Challenges

The U.S. telecom industry is highly competitive and price sensitive. High market saturation and a limited user base make it difficult to raise average revenue per user with price adjustments. It also significantly raises customer retention costs. Despite the company’s effort to improve customer retention with the convergence model, the issue still persists, and this is going to keep profitability under pressure in the upcoming quarters.

Its major competitor, AT&T, is also expanding its fiber network. In 2025, AT&T’s fiber broadband network reached 30 million consumer and business locations across the United States. To expand its fiber footprint, the company has taken a multi-dimensional approach, which includes growing and improving its in-region fiber network, public-private partnerships, commercial open access agreements and strategic acquisitions. T-Mobile is aggressively upgrading its 5G network to gain a stronger foothold in the industry.

The company recorded high capital expenditures in order to support the 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. Generating a reasonable return from such an investment will take time and impede margin and cash flow in the near term.

Growing investment in network expansion is driving up the operating expenses. In the fourth quarter of 2025, total operating expenses were up 11% to $31.38 billion. Consequently, operating income declined 32.6% to $5 billion. Consolidated adjusted EBITDA decreased to $11.86 billion from $11.93 billion, for respective margins of 32.6% and 33.4%.

Estimate Revision Trend of VZ

VZ’s earnings estimates for 2026 and 2027 have increased over the past 60 days.

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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’s shares currently trade at 9.6, lower than 12.65 for the industry.

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End Note

In a highly competitive and saturated U.S. telecom market, Verizon's prudent approach to introducing converged plans will likely improve churn rates. Moreover, VZ’s proactive strategy to develop new use cases for its robust network portfolio beyond its traditional communication services market is commendable. Its strategy of rapidly scaling its fiber footprint to become a leading broadband provider will likely bring long-term benefits.

However, stiff competition in the industry, high user retention, and acquisition expenses are hindering the margin. High debt burden makes it vulnerable to macro headwinds. 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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