Is Verizon Stock Undervalued? What the US Market's Latest Performance Reveals

Verizon Communications Inc. (VZ) has faced moderate headwinds over the past six months, declining 6.2% while the broader Wireless National industry contracted 9.4%. Despite underperforming both the Zacks Computer & Technology sector and the S&P 500, Verizon has actually held its ground better than many competitors. Shares of AT&T have dropped 7.9% and T-Mobile US has plummeted 11.7%, signaling that Verizon’s relative stability reflects its position as a more defensive player in the telecommunications space.

Competition Intensifies as Business Segment Stumbles

The telecom landscape in the US remains fiercely contested, with Verizon, AT&T, T-Mobile, and Comcast all aggressively expanding network infrastructure to capture market share. This arms race in the saturated wireless market has created significant margin pressures. For Verizon, the challenge is particularly acute in its Business segment, where revenues hit $7.14 billion in Q3—down 2.8% year-over-year and below analyst expectations of $7.3 billion.

The underlying issue stems from muted demand in the enterprise and public sector verticals, exacerbated by macroeconomic uncertainty that has forced customers to tighten spending. Additionally, Verizon’s aggressive promotional strategy, including a three-year price lock guarantee on myPlan and myHome services, aims to attract and retain customers but comes at the cost of margin compression. The company is essentially trading short-term profitability for long-term customer loyalty and market share gains.

Growth Engines Firing: Consumer Strength and Fiber Momentum

On a brighter note, Verizon’s Consumer segment is firing on all cylinders. Q3 revenues climbed 2.9% year-over-year to $26.1 billion, buoyed by solid wireless equipment and service sales. The company’s wireless retail postpaid churn rate of 1.12% demonstrates healthy customer retention, while 306,000 broadband net additions show momentum in the increasingly valuable fiber-to-home market.

The Frontier Communications acquisition represents a pivotal moment for Verizon’s long-term strategy. By integrating Frontier’s fiber network into its Fios infrastructure, Verizon is positioning itself to significantly reduce customer churn and unlock new revenue streams across the US.

Business Segment Shows Signs of Stabilization

Recent contract wins suggest Verizon Business may be turning a corner. High-profile partnerships—including a deal with AWS to provide high-capacity, low-latency fiber infrastructure, deployment of 100G optical rings for major sports organizations, and 5G rollouts at Fortune 500 companies like KPMG—indicate renewed traction in the enterprise space. These wins suggest the segment is moving from contraction to recovery.

Valuation and Outlook

From a valuation perspective, Verizon trades at an 8.52 forward price-to-earnings ratio, substantially below the industry average of 12.25, suggesting potential upside for value-conscious investors. Earnings estimates for 2025 remain stable, though 2026 projections have dipped 0.81% to $4.89 per share—a modest decline reflecting near-term caution.

Zacks Investment Research rates Verizon at Rank #3 (Hold), acknowledging the company’s balanced risk-reward profile. While Business segment weakness and competitive pressures remain headwinds, fiber expansion initiatives and improving enterprise customer wins present meaningful long-term catalysts. The US telecommunications market remains brutally competitive, but Verizon’s defensive positioning and strategic fiber investments suggest it can navigate current challenges while positioning for future growth.