Bore Family Office
Valuation Report — Verizon Communications Inc. (VZ) • March 6, 2026
3-Stage DDM (Ke) • Discount Rate: 8.00% • Current Price: $51.12
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Verizon Communications Inc. is the largest wireless carrier in the United States by subscribers (~93 million postpaid phone connections) and one of the largest broadband providers. Formed through the merger of Bell Atlantic and GTE in 2000, Verizon has invested aggressively in network infrastructure — leading 5G deployment in C-band and mmWave spectrum — while divesting non-core assets (Yahoo, AOL, Verizon Media). The $20B Frontier Communications acquisition closed in early 2025, adding ~7 million fiber passings and expanding VZ's broadband addressable market significantly.
| Segment |
What It Does |
% Revenue |
Revenue (approx.) |
Growth Trend |
EBITDA Margin |
| Consumer Wireless | Postpaid phone, tablets, home internet | ~65% | ~$89.8B | +2–3% | ~38% |
| Business Solutions | Enterprise, SMB, government wireless/fiber | ~25% | ~$34.5B | +1–2% | ~27% |
| Fixed Wireless Access (FWA) | Home broadband via 5G (4.6M subscribers) | ~5% | ~$6.9B | +30%+ | ~35% |
| Frontier (Wireline Fiber) | Acquired fiber network, 7M+ passings | ~5% | ~$6.9B | Integration | ~30% |
The Frontier acquisition is the most significant strategic event in years — adding 7M fiber passings and expanding FWA market. However, it added ~$14B in net debt. Integration risk is meaningful: legacy wireline churn, capex required for fiber buildout, and cost synergy timing are all execution risks through 2027.
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|
| Revenue ($M) | $133,613 | $136,835 | $133,974 | $134,788 | $138,191 |
| EBITDA ($M) | $48,654 | $47,566 | $40,501 | $46,578 | $47,608 |
| Operating Income ($M) | $32,448 | $30,467 | $22,877 | $28,686 | $29,259 |
| Net Income ($M) | $22,065 | $21,256 | $11,614 | $17,506 | $17,174 |
| EPS (diluted) | $5.32 | $5.06 | $2.75 | $4.14 | $4.06 |
| Free Cash Flow ($M) | $19,253 | $14,054 | $18,708 | $19,822 | $20,126 |
| Annual DPS | $2.535 | $2.585 | $2.635 | $2.685 | $2.735 |
| Total Debt ($M) | $177,930 | $176,331 | $174,942 | $168,357 | $181,643 |
| Rev YoY Growth | — | +2.4% | -2.1% | +0.6% | +2.5% |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|
| Risk-Free Rate (Rf) | 4.35% | 10-yr US Treasury yield |
| Beta (β) | 0.670 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 8.00% | Ke = Rf + β × ERP |
📈 DDM Scenarios
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $2.872 | $2.660 | $2.66 |
| Year 2 | Stage 1 | $2.916 | $2.500 | $5.16 |
| Year 3 | Stage 1 | $2.959 | $2.349 | $7.51 |
| Year 4 | Stage 1 | $3.004 | $2.208 | $9.72 |
| Year 5 | Stage 1 | $3.049 | $2.075 | $11.79 |
| Year 6 | Stage 2 | $3.079 | $1.940 | $13.73 |
| Year 7 | Stage 2 | $3.110 | $1.815 | $15.55 |
| Year 8 | Stage 2 | $3.141 | $1.697 | $17.24 |
| Year 9 | Stage 2 | $3.173 | $1.587 | $18.83 |
| Year 10 | Stage 2 | $3.204 | $1.484 | $20.31 |
| Terminal | — | TV=$50.04 | PV(TV)=$23.18 (53% of IV) | |
Base Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $2.901 | $2.686 | $2.69 |
| Year 2 | Stage 1 | $2.973 | $2.549 | $5.23 |
| Year 3 | Stage 1 | $3.048 | $2.419 | $7.65 |
| Year 4 | Stage 1 | $3.124 | $2.296 | $9.95 |
| Year 5 | Stage 1 | $3.202 | $2.179 | $12.13 |
| Year 6 | Stage 2 | $3.266 | $2.058 | $14.19 |
| Year 7 | Stage 2 | $3.331 | $1.944 | $16.13 |
| Year 8 | Stage 2 | $3.398 | $1.836 | $17.97 |
| Year 9 | Stage 2 | $3.466 | $1.734 | $19.70 |
| Year 10 | Stage 2 | $3.535 | $1.637 | $21.34 |
| Terminal | — | TV=$60.10 | PV(TV)=$27.84 (57% of IV) | |
Bull Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $2.943 | $2.725 | $2.73 |
| Year 2 | Stage 1 | $3.061 | $2.624 | $5.35 |
| Year 3 | Stage 1 | $3.183 | $2.527 | $7.88 |
| Year 4 | Stage 1 | $3.311 | $2.433 | $10.31 |
| Year 5 | Stage 1 | $3.443 | $2.343 | $12.65 |
| Year 6 | Stage 2 | $3.546 | $2.235 | $14.89 |
| Year 7 | Stage 2 | $3.653 | $2.131 | $17.02 |
| Year 8 | Stage 2 | $3.762 | $2.033 | $19.05 |
| Year 9 | Stage 2 | $3.875 | $1.939 | $20.99 |
| Year 10 | Stage 2 | $3.992 | $1.849 | $22.84 |
| Terminal | — | TV=$74.39 | PV(TV)=$34.46 (60% of IV) | |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|
| 6.0% | $68 | $74 | $81 | $91 | $105 |
| 6.5% | $61 | $66 | $71 | $78 | $88 |
| 7.0% | $56 | $59 | $63 | $69 | $76 |
| 7.5% | $51 | $54 | $57 | $61 | $66 |
| 8.0% | $47 | $49 | $52 | $55 | $59 |
| 8.5% | $44 | $45 | $48 | $50 | $53 |
| 9.0% | $41 | $42 | $44 | $46 | $48 |
| 9.5% | $38 | $39 | $41 | $43 | $45 |
| 10.0% | $36 | $37 | $38 | $40 | $41 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | EV/EBITDA | P/E | Div Yield | Net Debt ($B) | FCF/Share |
|---|
| VZ (Current) | 6.8x | 12.6x | 5.54% | $162.6B | $4.76 |
| T (AT&T) | 7.2x | 14.8x | 4.80% | $127.3B | $2.02 |
| TMUS (T-Mobile) | 8.4x | 19.2x | 1.70% | $72.4B | $6.50 |
| LUMN (Lumen) | 4.1x | N/M | 0.00% | $17.8B | N/M |
| VZ 5yr Avg | 7.8x | 11.5x | 5.20% | — | — |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|
| Annual DPS | $2.830 |
| Current Yield | 5.54% |
| Consecutive Growth Years | 21 |
| 1-yr DPS CAGR | +1.9% |
| 3-yr DPS CAGR | +1.9% |
| 5-yr DPS CAGR | +2.0% |
| 10-yr DPS CAGR | +2.0% |
| Payout Ratio (DPS/EPS) | 68.1% |
| FCF Payout Ratio | 57.6% |
| Sustainability Verdict | ✅ Safe — Watch Debt |
VZ dividend is safe: FCF payout ratio only 57.4% ($2.74 DPS / $4.76 FCF/share). VZ generates $20B+ FCF annually, covering $11.6B in dividends with substantial headroom. 21 consecutive years of dividend growth. However, $162.6B net debt is the dominant long-term risk — any FCF deterioration or refinancing at higher rates could pressure dividend growth trajectory. Watch: dividend growth is decelerating (~2%/yr vs. ~2.5% historical). The Frontier acquisition adds $14B+ debt but should improve revenue and FCF profile by 2027. Annual dividend income from position: $2.83 × 5,353 shares = $15,149/yr.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2021 | $5.32 | — | — | — | Actual |
| 2022 | $5.06 | — | — | — | Actual |
| 2023 | $2.75 | — | — | — | Actual |
| 2024 | $4.14 | — | — | — | Actual |
| 2025 | $4.06 | — | — | — | Actual |
| 2026 | $4.68 | $5.07 | $5.35 | 29 | Estimate |
| 2027 | $4.81 | $5.42 | $5.81 | 28 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2021 | $0.1B | — | — | — | Actual |
| 2022 | $0.1B | — | — | — | Actual |
| 2023 | $0.1B | — | — | — | Actual |
| 2024 | $0.1B | — | — | — | Actual |
| 2025 | $0.1B | — | — | — | Actual |
| 2026 | $0.1B | $0.1B | $0.2B | 29 | Estimate |
| 2027 | $0.1B | $0.2B | $0.2B | 28 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $49.33 | Range $43–$58
| Analyst | Firm | Rating | PT | Upside |
|---|
| Jonathan Kees | Daiwa Capital | Strong Buy | $58 | +13.5% |
| Michael Rollins | Citigroup | Strong Buy | $50 | -2.2% |
| Sebastiano Petti | JP Morgan | Hold | $49 | -4.1% |
| Benjamin Swinburne | Morgan Stanley | Hold | $49 | -4.1% |
| Jonathan Atkin | RBC Capital | Hold | $48 | -6.1% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|
| Q4 2025 | $1.10 vs $1.09 | +$0.01 ✅ | $0.0B vs $0.0B | +$0.0B ✅ | Raised FY2026 |
| Q3 2025 | $1.19 vs $1.18 | +$0.01 ✅ | $0.0B vs $0.0B | +$0.0B ✅ | Maintained |
| Q2 2025 | $1.15 vs $1.15 | +$0.00 ✅ | $0.0B vs $0.0B | +$0.0B ✅ | Maintained |
| Q1 2025 | $1.19 vs $1.15 | +$0.04 ✅ | $0.0B vs $0.0B | +$0.0B ✅ | Raised slightly |
(e) Confidence Band Commentary
VZ is a steady but slow-growth business. Estimate ranges are moderate — the bull/bear spread on EPS is ~$0.67 for FY2026, reflecting primarily Frontier synergy uncertainty and wireless subscriber growth assumptions. Consistent quarterly beats but minimal upside surprise magnitude. The Frontier integration is the key variable for 2027+ estimates.
💡 Investment Thesis
Bull case: At $51, VZ trades above analyst consensus ($49.33) but remains a high-income holding. The Frontier acquisition is strategically sound — fiber broadband + wireless is the winning bundle. Fixed Wireless Access is growing 30%+ annually from a small base. If 5G monetization accelerates (private networks, enterprise IoT, AI connectivity), VZ's ARPU inflects and debt paydown accelerates. FCF payout ratio of 57.4% gives substantial dividend headroom. Bull IV: $57.30.
Bear case: $162.6B of net debt is the existential risk. VZ refinances ~$18B+ annually — at 8% rates vs. legacy 4–5% rates, interest expense climbs ~$500M/yr. If wireless subscribers stagnate (TMUS is the structural share gainer), revenue growth disappoints, and FCF gets consumed by capex for Frontier integration rather than debt paydown. Dividend growth could slow to 0–1% or freeze entirely. Bear IV: $43.49. With consensus PT at $49.33 already below today's $51.12, downside is real.
Key assumptions — Base case: DPS grows at 2.5%/yr (consistent with recent trajectory), Ke of 8.0% (market-implied, reflecting debt premium), terminal growth 2.0%. Produces Base IV $49.18 — validates that VZ is currently overvalued by ~4% relative to fair value.
Position view: Joseph holds 5,353 shares at a $39.62 cost basis — a $73,019 unrealized gain (47%). At current price, VZ is slightly overvalued per our model ($51 vs. $49 fair value). The 5.54% yield provides excellent income ($15,149/yr), and the cost-basis yield on investment is 7.14%. Trimming is not warranted unless price reaches $58+, but adding here would be at a modest premium to fair value. Hold and collect income.
⚖️ DDM Verdict: Hold — Verizon Communications Inc. (VZ)
Current price: $51.12 | Analyst Avg PT: $49.33
| Tier | Price | Action |
|---|
| Tier 1 — Starter | ≤$47 | Begin position |
| Tier 2 — Add | ≤$44 | Add on weakness |
| Tier 3 — Full | ≤$42 | Full allocation |
| Sell Alert | ≥$58 | Above fair value — consider trimming |
Hold. Income position performing. Do not add at current prices.
- Current price $51.12 is ~4% ABOVE our Base IV ($49.18) and above analyst consensus PT ($49.33)
- 5.54% dividend yield is exceptional — position generating $15,149/yr income
- Cost basis yield: $2.83/$39.62 = 7.14% yield on cost — do not disturb this
- Accumulate if/when price pulls back below $47 (meaningful margin of safety to fair value)
- Consider trimming 10–15% of position above $58 (near Bull IV)
- Thesis breaks if: Dividend growth freezes OR debt-to-EBITDA rises above 3.5× for 2+ years
- Watch: Frontier integration progress, FWA subscriber growth, and debt paydown pace
VZ is the income engine of the portfolio. Hold. Let the dividend grow. The 47% unrealized gain on a 7.14% yield-on-cost position is exactly what this portfolio is built for.
📂 Current Position Summary
| Metric | Value |
|---|
| Shares Held | 5,353.22 |
| Average Cost Basis | $39.62 |
| Current Market Value | $273,657 |
| Unrealized P&L | $+61,562 (+29.0%) |
| Annual Dividend Income | $15,150/yr |
| Yield on Cost | 7.14% |
| vs Target Position (~$200K) | $273,657 vs $200,000 (137% of target) |
Bore Family Office • Analysis generated by Lurch • Not investment advice.
