Verizon Communications Inc. (NYSE:VZ) earns mobile and broadband service fees from consumers and businesses. Fixed wireless delivers internet over its mobile network, adding 193,000 net connections in Q2 2026. With its nationwide network and recurring service revenue, Verizon Communications Inc. (NYSE:VZ) is among the 10 Most Active Blue Chip Stocks to Buy Right Now.
At 8x forward earnings, Verizon Communications Inc. looks fairly valued. Broadband offers growth, while modest earnings expansion and substantial investment requirements support its discount to faster-growing competition.
Spare Capacity Must Pay Its Way
Verizon Communications Inc. can connect households without digging fiber to each property. Bundling mobile and broadband can reduce cancellations, allowing longer customer relationships to repay promotional discounts.
Dense demand and simultaneous evening streaming can exhaust local capacity. Additional radios and network connections then require capital, while rivals’ fiber and wireless expansion limits pricing. Network rules allow lower priority for heavy fixed wireless traffic during congestion. The existing network supports a higher multiple only when additional service profits exceed customer and capacity costs.
The Earnings Gap Includes Accounting Adjustments
Verizon Communications Inc. trades at 8x forward P/E versus 12x trailing P/E. Trailing P/E uses historical earnings; forward P/E uses forecast earnings. The forward multiple reflects normalized earnings estimates for 2027.
Q2 reported EPS was $0.92 versus non-GAAP adjusted EPS of $1.30. Adjusted EPS excludes a held-for-sale loss, severance, asset rationalization, acquisition amortization, and integration costs. These exclusions help explain the valuation gap alongside expected earnings growth.
The restructuring costs matter for Verizon Communications Inc.: excluding charges improves adjusted earnings, but shareholder value depends on the cash savings that follow. Lower device subsidies and operating-cost discipline support profitability. Broadband must contribute service profits after discounts and network costs, rather than simply increase connections.
Cash Returns Must Support the Historical Range
Verizon Communications Inc. traded at 8x forward earnings at year-end 2024 and 9x at year-end 2025. The current multiple remains close to both historical observations. Recovering earnings and broadband expansion support the valuation, while capital requirements limit the case for a higher multiple.
First-half free cash flow, a non-GAAP measure of operating cash flow less capital spending, rose 16% to $10.2 billion after $8.2 billion of investment. Management expects 2026 capital spending of $16.0 billion to $16.5 billion. Dividends and buybacks absorbed $9.4 billion in the first half, leaving limited cash for faster debt repayment.
Net unsecured debt, a non-GAAP measure, was $128.7 billion, making disciplined investment essential. Improving group cash flow supports the valuation, but fixed wireless must earn attractive returns after additional capacity spending. Congestion that increases mobile cancellations could undermine both revenue streams.
Faster Earnings Growth Supports the Peer Premium
The 8x forward P/E for Verizon Communications Inc. compares with 11x for T-Mobile US, Inc. (NASDAQ:TMUS). Both multiples use 2027 normalized earnings estimates. The peer is the closest operating comparison because both sell fixed wireless broadband over nationwide mobile networks.
Consensus forecasts imply 2027 adjusted EPS growth of approximately 5% for Verizon Communications Inc., versus 14% for T-Mobile US, Inc.. Both comparisons use December fiscal years against 2026. The peer’s Q2 service revenue grew 9%, while non-GAAP adjusted free cash flow increased 4%; acquired operations contribute to growth.
Faster expected earnings growth supports the peer premium. The primary company’s legacy wireline exposure and integration of Frontier Communications Parent, Inc. add execution demands. For investors evaluating 10 Most Active Blue Chip Stocks to Buy Right Now, its lower multiple becomes more attractive when broadband improves cash returns without accelerating investment needs.
Conclusion
Verizon Communications Inc. looks fairly valued at 8x forward earnings. Sustaining that judgment requires broadband revenue to cover customer costs and capacity upgrades while preserving mobile service quality and retention. A higher valuation requires stronger recurring earnings and cash available for debt reduction.
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This article is originally published at Insider Monkey.
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