Verizon (VZ)

Telecommunications giant Verizon (NYSE:VZ) missed Wall Street’s revenue expectations in Q3 CY2025 as sales only rose 1.5% year on year to $33.82 billion. Its non-GAAP profit of $1.21 per share was 1.5% above analysts’ consensus estimates.

Company Overview

Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.

The massive physical footprints of cell phone towers, fiber in the ground, or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their landlines and traditional cable subscriptions in favor of wireless communications and streaming video. These trends do mean that more households need cell phone plans and high-speed internet. Companies that successfully serve customers can enjoy high retention rates and pricing power since the options for mobile and internet connectivity in any geography are usually limited.

Competitors in the telecommunications industry include AT&T (NYSE:T), T-Mobile (NASDAQ:TMUS), and Comcast (NASDAQ:CMCSA).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Verizon grew its sales at a weak 1.4% compounded annual growth rate. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Verizon’s annualized revenue growth of 1.3% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

This quarter, Verizon’s revenue grew by 1.5% year on year to $33.82 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months, similar to its two-year rate. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.

Verizon’s operating margin has risen over the last 12 months and averaged 19.7% over the last two years. On top of that, its profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

This quarter, Verizon generated an operating margin profit margin of 24%, up 6.2 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Verizon’s flat EPS over the last five years was below its 1.4% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

In Q3, Verizon reported adjusted EPS of $1.21, up from $1.19 in the same quarter last year. This print beat analysts’ estimates by 1.5%. Over the next 12 months, Wall Street expects Verizon’s full-year EPS of $4.72 to grow 1.8%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Verizon has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 14.6% over the last two years, better than the broader consumer discretionary sector.

Verizon’s free cash flow clocked in at $6.96 billion in Q3, equivalent to a 20.6% margin. This result was good as its margin was 2.7 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends carry greater meaning.

Over the next year, analysts’ consensus estimates show they’re expecting Verizon’s free cash flow margin of 15.4% for the last 12 months to remain the same.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Verizon historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 10.2%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Verizon’s ROIC decreased by 2.5 percentage points annually over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Verizon reported $7.71 billion of cash and $170.5 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $50.06 billion of EBITDA over the last 12 months, we view Verizon’s 3.3× net-debt-to-EBITDA ratio as safe. We also see its $6.38 billion of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

Revenue missed, but EPS managed to beat as the company lifted operating margin year on year. Overall, this was a mixed quarter. The stock traded up 2.8% to $40.41 immediately following the results.

Updated: December 4, 2025 at 10:36 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Verizon.

Verizon doesn’t pass our quality test. First off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. On top of that, Verizon’s Forecasted free cash flow margin for next year suggests the company will fail to improve its cash conversion, and its .

Verizon’s P/E ratio based on the next 12 months is 8.6x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $47.53 on the company (compared to the current share price of $41.23).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.