Is Verizon Stock Cheap, Or Is Its Cash Already Spoken For?

Is Verizon Stock Cheap, Or Is Its Cash Already Spoken For?

Fri, September 18, 2026 at 7:04 PM GMT+3 3 min read

Verizon Communications (VZ) trades near $48 a share and generated free cash worth 10.0% of its market value over the last twelve months. The median S&P 500 company manages 4.5%. A gap that wide usually means one of two things: a bargain, or a business the market expects to shrink. Verizon is neither, quite. The cash is real, and it is not all yours.

How Does Verizon Make This Much Cash?

The engine is a monthly bill. Verizon turned $138.9 billion of revenue over the trailing twelve months into $20.2 billion of free cash flow. The broadband base is still growing, past 17.1 million subscribers across fixed wireless access and fiber.

Then there is the debt. Verizon carries about $186.7 billion of net debt, close to its entire market value. Measure the same cash against enterprise value, which adds that debt in, and the yield is about 5.2% rather than 10.0%. Lenders are paid before you are. Shareholders are not left out, though: dividends and buybacks together returned about 7.5% of market value over the last twelve months.

So Why Is The Market Not Paying Up For It?

Because the top line barely moves. Revenue grew 1.4% over the trailing twelve months, against a median of 8.3% for S&P 500 companies. Cash can grow on cost discipline for a while. Sooner or later it needs revenue underneath it.

Some of the stall is self-inflicted. Verizon scrapped activation and upgrade fees across the loyalty program it launched in mid-June. It also sold far fewer handsets: upgrade volumes fell nearly 27% year over year in the second quarter of 2026, pulling equipment revenue down about 20%. Management ties a working capital benefit to those same lower upgrade volumes, so the decision shows up twice: less revenue at the top, more cash lower down.

Verizon returned 18.0% over the past twelve months, a little ahead of the 17.0% the S&P 500 returned. The market is not fleeing the cash. It is refusing to pay a growth price for it.

What Could Make The Cash Worth More?

Start with the debt. By the end of the second quarter of 2026 Verizon had paid off substantially all of the debt it took on from Frontier, the fiber business it is integrating, six months ahead of schedule, and it expects to reach its own leverage target during 2027. Paying debt down is what closes the gap between the two yields.

Then there is a new customer for fiber the company already owns. Verizon signed an agreement worth over $1 billion to connect that customer's data centers with dark fiber, and management expects revenue from deals of this kind to start landing in 2027.

The number that settles this arrives with the fourth quarter of 2026. Management has guided mobility and broadband service revenue to grow about 4% year over year then, after 2.8% in the second quarter of 2026. Hit that, and the raised guidance of 9% to 10% free cash flow growth for 2026 has a top line behind it. Our screen of the companies whose guidance keeps climbing shows whether raises like that stand out or blend in.

So Do You Buy Verizon Stock For A Yield You Share?

The yield you actually own is the 5.2% on enterprise value, not the 10.0% on market value, and against growth this slow that is a fair price rather than a cheap one. Only a faster top line would make it cheap. Judging one yield on its own is the hard way to settle it, which is what the Trefis High Quality Portfolio is for. That portfolio has a track record of outpacing the three major indices.