Why Verizon Stock Popped Today
Key Points
Verizon beat on earnings but missed on revenue this morning.
Sales growth was slow as usual, but profits surged 50%.
- 10 stocks we like better than Verizon Communications ›
Verizon Communications (NYSE: VZ) stock gained 2.1% through 1:45 p.m. ET Wednesday after the company reported mixed earnings.
Heading into the telecommunications giant's third-quarter report, analysts forecast Verizon would earn $1.19 per share on $24.3 billion in revenue. Verizon beat the earnings number, returning $1.21 per share, but missed on sales, delivering only $33.8 billion.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Verizon's Q3 earnings
Formed from the breakup of Ma Bell more than 40 years ago, Verizon's not really a fast-growth company anymore. Q3 sales grew only 1.5% year over year. Still, Verizon delivered impressive earnings growth.
Generally accepted accounting principles (GAAP) profits grew 50% to $1.17 per share. (The $1.21 was a non-GAAP number.) Free cash flow through the year's first nine months grew 9% to stand now at $15.8 billion.
Credit Verizon's broadband business for this growth: Broadband net additions hit 306,000. The wireless phone business shrank slightly, with postpaid contracts falling a net 7,000 customers. Prepaid customers helped make up the difference, growing by 47,000.
Is Verizon stock a buy?
Verizon said total wireless revenue will still end up growing this year, too, rising perhaps 2% or even 2.8% through year-end. And free cash flow for the year could reach anywhere from $19.5 billion to $20.5 billion.
On a $170 billion market capitalization, this values Verizon stock at a price-to-free-cash-flow ratio of about 8.5. That sounds reasonable to me given the stock's generous 7% dividend yield -- and the fact that free cash flow is growing at 9%.
Granted, Verizon does still carry a large debt load -- at $170 billion, it's basically equal to the company's market cap. Despite the debt though, the worst I can say about Verizon is that the stock might be only fairly valued, and not obviously cheap. To me, Verizon stock looks like a buy.
Should you invest $1,000 in Verizon Communications right now?
Before you buy stock in Verizon Communications, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Verizon Communications wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,569!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,232,286!*
Now, it’s worth noting Stock Advisor’s total average return is 1,065% — a market-crushing outperformance compared to 196% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of October 27, 2025
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
Recommended Articles
