For years, the knock on Verizon Communications (NYSE:VZ) was that the business was stuck. That story has been changing quarter by quarter. Then SpaceX showed up, and the stock got knocked down anyway.
Verizon is one of the three big US wireless carriers, capturing attention among income-focused investors tracking the 10 Best US Stocks to Buy Under $50. It earns most of its money from monthly phone plans and also sells home internet through fiber and fixed wireless access (broadband beamed over its cellular network). If you pay a phone bill, there’s a decent chance you’ve met the recurring revenue Verizon is built on.
The question is whether the sell-off reflects a real crack in that model or a fear priced in long before it can hurt. The answer depends on Verizon’s own numbers, and on how close a satellite rival really is.
Scale Few Can Match
Verizon’s edge is scale. A national wireless network takes decades, deep spectrum holdings, and capital spending of $16.0 billion to $16.5 billion, Verizon’s plan for this year alone. Few companies can write that check.
That scale shows up in profitability. In the second quarter of 2026, adjusted EBITDA (operating profit before depreciation and one-time items) hit a record $13.7 billion, with a margin of 40.1%. A business with that margin and recurring billing doesn’t need dramatic growth to throw off cash.
The Turnaround Shows in Cash
Under CEO Dan Schulman, Verizon has shifted away from device subsidies and toward simpler plans, bundled offerings, and loyalty perks. The company says churn (the rate at which customers cancel) is falling while it spends less to win and keep subscribers. The second-quarter results backed that up. Verizon added 184,000 postpaid phone customers, and mobility and broadband service revenue rose 2.8% to about $23.4 billion. Total revenue slipped 0.7% to $34.3 billion, but that mostly reflects weaker equipment sales as fewer customers upgraded phones, not a weaker core business.
Cash flow tells the clearer story. Free cash flow reached $6.4 billion for the quarter, up 24.4%, and $10.2 billion for the first half. Adjusted EPS rose to $1.30 from $1.22. Management raised its full-year outlook for a second straight quarter, now calling for adjusted EPS of $4.99 to $5.04 and buybacks of up to $4.5 billion. Broadband is pulling its weight too, with 348,000 net additions, 193,000 of them fixed wireless and 155,000 fiber. Bundling phone and home internet is a convergence push cable rival Comcast is chasing from the other side.
Can Starlink Really Steal Verizon’s Customers?
The worry is real. SpaceX has been buying wireless spectrum to take its Starlink satellite service directly to phones, and its latest purchase sent Verizon and its rivals sharply lower in recent days. That’s a well-funded competitor that doesn’t need cell towers to reach customers.
Still, satellite-to-phone service today mostly fills dead zones, with capacity far below a dense ground network in the cities where most subscribers live and stream. The threat could grow over time, especially in rural areas, but Verizon’s reported subscriber trends don’t show it biting yet. The selling also hit AT&T and T-Mobile, which suggests an industry-wide fear rather than a Verizon-specific failure.
Already Priced for Little
Even before the sell-off, Verizon wasn’t expensive. It trades at 8.29 times forward earnings, as of October 9, against a sector average of 12.35. Put plainly, investors pay about $8 for each dollar of expected earnings here, versus more than $12 across the sector. That discount isn’t new. The 5-year average P/E is 8.79, so the stock sits a touch below its own history even as guidance keeps rising.
Growth explains part of the gap. Expected EPS growth of 5.04% in 2027 is steady rather than exciting, which fits a mature carrier. Debt is the other part. Net unsecured debt stood at $128.7 billion, down from $130.1 billion a quarter earlier, with leverage at 2.5 times adjusted EBITDA. That balance sheet is why income investors often weigh Verizon against other 10 Best Dividend Kings To Buy According to Hedge Funds.
But a multiple around 8 already assumes very little. To justify a much lower one, SpaceX would have to erode subscriber gains that are still coming in. Hedge fund interest edged up, with 79 funds holding the stock in the most recent quarter, up from 75 in the prior one. Short interest sits at just 2.02% of the float, which points to relatively limited bearish positioning despite the recent drop.
A Discount Waiting on Proof
The evidence points to a business that’s improving while the stock gets priced as if it isn’t. Below both the sector and its own 5-year norm, Verizon carries a discount its recent results don’t fully justify. The setup suits patient, income-minded investors more than anyone chasing fast growth.
The next test arrives with third-quarter results later this month. If postpaid phone additions or churn start to weaken where satellite service competes, the SpaceX worry would stop being a theory, and the discount would start to look deserved.
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