VZ
VZ
Hold 2026-04-30
Model
DCF
Price at Report
$46.61
Base IV
$50.26
Bear IV
$39.12
Bull IV
$66.42
Entry Zone: 37-46 · Sell Above: 58
Bore Family Office
Valuation Report — Verizon Communications (VZ) • April 30, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 7.50% • Current Price: $46.61
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Verizon Communications is one of the largest wireless carriers in the United States, serving over 115 million retail connections through its Verizon Consumer and Verizon Business segments. The company operates a nationwide 5G network and maintains significant fiber-optic infrastructure through its Fios brand, providing broadband, TV, and phone services across nine Northeastern and Mid-Atlantic states.
Verizon generates substantial free cash flow — roughly $20B annually — but carries heavy debt ($181.6B total, $162.6B net) from years of spectrum acquisitions and network investment. Revenue growth has been anemic (0-2% historically), but the 5G investment cycle is beginning to monetize through network-as-a-service, fixed wireless access, and IoT applications. The TracFone acquisition (closed 2021) expanded the prepaid base and is now largely integrated.
Key developments: VZ raised its quarterly dividend to $0.7075/share (annual $2.83) effective April 2026, marking the 21st consecutive year of dividend growth. Management targets 2026 EPS of ~$5.06 (+24.7% YoY, though largely tax-driven normalization). Net debt paydown remains a priority, with leverage at ~3.4x EBITDA — high but structurally normal for telecoms.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Verizon Consumer | $106,000M | 77% | +2.5% | — | Wireless postpaid + prepaid; Fios broadband/video; largest segment |
| Verizon Business | $32,200M | 23% | +2.0% | — | Enterprise mobility, networking, security, IoT; stable but lower margin |
| Blended Growth Rate | — | 100% | +2.4% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 8.3% | 8–12% adequate |
| FCF Margin | 14.6% | ≥10% strong |
| Debt / EBITDA | 3.8x | 2–4x moderate |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $133,613 | $136,835 | $133,974 | $134,788 | $138,191 |
| Rev YoY Growth | — | +2.4% | -2.1% | +0.6% | +2.5% |
| Gross Margin | 57.9% | 56.8% | 59.0% | 59.9% | 58.9% |
| EBITDA ($M) | $48,654 | $47,566 | $40,501 | $46,578 | $47,608 |
| EBITDA Margin | 36.4% | 34.8% | 30.2% | 34.6% | 34.5% |
| Operating Income ($M) | $32,448 | $30,467 | $22,877 | $28,686 | $29,259 |
| Operating Margin | 24.3% | 22.3% | 17.1% | 21.3% | 21.2% |
| Net Income ($M) | $22,065 | $21,256 | $11,614 | $17,506 | $17,174 |
| Net Margin | 16.5% | 15.5% | 8.7% | 13.0% | 12.4% |
| 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 | $181,643 |
💹 Capital Return & Share Count Analysis
Net Share Change
+2.8% (2016→2025)
📈 Net dilution — issuances exceed buybacks
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2016 | 4103.0M | — | — | — |
| 2017 | 4075.0M | -0.7% | — | — |
| 2018 | 4064.0M | -0.3% | — | — |
| 2019 | 4073.0M | +0.2% | — | — |
| 2020 | 4150.0M | +1.9% | — | — |
| 2021 | 4140.0M | -0.2% | $3,900 | 2.0% |
| 2022 | 4200.0M | +1.4% | $3,300 | 1.7% |
| 2023 | 4204.0M | +0.1% | $2,100 | 1.1% |
| 2024 | 4210.0M | +0.1% | $1,200 | 0.6% |
| 2025 | 4216.0M | +0.1% | $800 | 0.4% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.620 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 7.71% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.46% | × (1 − 23%) |
| Weight Equity (We) | 51.6% | Mkt cap $0.0B |
| Weight Debt (Wd) | 48.4% | Gross debt $0.0B |
| WACC | 7.50% | DCF discount rate |
📈 DCF Scenarios
$39
🔴 Bear
$50
📊 Base
$66
🚀 Bull
$46.61
Current Price
$50
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 2.5% | 8.00% | $39 | ▼16.1% |
| 📊 Base | 2.5% | 2.0% | 2.5% | 7.50% | $50 | ▲7.8% |
| 🚀 Bull | 3.0% | 2.5% | 3.0% | 7.25% | $66 | ▲42.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $18.87B | $17.47B | $17.47B |
| Year 2 ✦ | Stage 1 | $19.25B | $16.50B | $33.98B |
| Year 3 ✦ | Stage 1 | $19.64B | $15.59B | $49.56B |
| Year 4 ✦ | Stage 1 | $20.03B | $14.72B | $64.29B |
| Year 5 ✦ | Stage 1 | $20.43B | $13.90B | $78.19B |
| Year 6 | Stage 2 | $20.74B | $13.07B | $91.26B |
| Year 7 | Stage 2 | $21.05B | $12.28B | $103.54B |
| Year 8 | Stage 2 | $21.36B | $11.54B | $115.08B |
| Year 9 | Stage 2 | $21.68B | $10.85B | $125.93B |
| Year 10 | Stage 2 | $22.01B | $10.19B | $136.12B |
| Terminal | — | TV=$410.2B | PV(TV)=$190.0B (58% of EV) | EV=$326.1B |
| Intrinsic Value | — | — | EV $326.1B − Net Debt → Equity / Shares | $39 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $410.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $190.0B). Enterprise Value = PV of FCFs ($136.1B) + PV of TV ($190.0B) = $326.1B. Subtracting net debt gives equity value of $163.5B, divided by shares outstanding = $39 per share.
Base Scenario
Stage 1: 2.5% | Stage 2: 2.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $18.96B | $17.64B | $17.64B |
| Year 2 ✦ | Stage 1 | $19.44B | $16.82B | $34.46B |
| Year 3 ✦ | Stage 1 | $19.92B | $16.04B | $50.50B |
| Year 4 ✦ | Stage 1 | $20.42B | $15.29B | $65.79B |
| Year 5 ✦ | Stage 1 | $20.93B | $14.58B | $80.37B |
| Year 6 | Stage 2 | $21.35B | $13.84B | $94.21B |
| Year 7 | Stage 2 | $21.78B | $13.13B | $107.33B |
| Year 8 | Stage 2 | $22.21B | $12.46B | $119.79B |
| Year 9 | Stage 2 | $22.66B | $11.82B | $131.61B |
| Year 10 | Stage 2 | $23.11B | $11.21B | $142.82B |
| Terminal | — | TV=$473.8B | PV(TV)=$229.9B (62% of EV) | EV=$372.7B |
| Intrinsic Value | — | — | EV $372.7B − Net Debt → Equity / Shares | $50 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $473.8B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $229.9B). Enterprise Value = PV of FCFs ($142.8B) + PV of TV ($229.9B) = $372.7B. Subtracting net debt gives equity value of $210.1B, divided by shares outstanding = $50 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 3.0% | Stage 2: 2.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $19.05B | $17.77B | $17.77B |
| Year 2 ✦ | Stage 1 | $19.63B | $17.06B | $34.83B |
| Year 3 ✦ | Stage 1 | $20.22B | $16.39B | $51.22B |
| Year 4 ✦ | Stage 1 | $20.82B | $15.74B | $66.95B |
| Year 5 ✦ | Stage 1 | $21.45B | $15.11B | $82.07B |
| Year 6 | Stage 2 | $21.98B | $14.44B | $96.51B |
| Year 7 | Stage 2 | $22.53B | $13.80B | $110.32B |
| Year 8 | Stage 2 | $23.10B | $13.19B | $123.51B |
| Year 9 | Stage 2 | $23.67B | $12.61B | $136.12B |
| Year 10 | Stage 2 | $24.27B | $12.05B | $148.17B |
| Terminal | — | TV=$588.1B | PV(TV)=$292.1B (66% of EV) | EV=$440.2B |
| Intrinsic Value | — | — | EV $440.2B − Net Debt → Equity / Shares | $66 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.25%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $588.1B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $292.1B). Enterprise Value = PV of FCFs ($148.2B) + PV of TV ($292.1B) = $440.2B. Subtracting net debt gives equity value of $277.6B, divided by shares outstanding = $66 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.5% | $81 | $93 | $109 | $132 | $166 |
| 6.0% | $67 | $77 | $88 | $104 | $126 |
| 6.5% | $57 | $64 | $72 | $84 | $99 |
| 7.0% | $48 | $53 | $60 | $68 | $79 |
| 7.5% | $41 | $45 | $50 | $57 | $65 |
| 8.0% | $34 | $38 | $42 | $47 | $53 |
| 8.5% | $29 | $32 | $35 | $39 | $44 |
| 9.0% | $25 | $27 | $30 | $33 | $37 |
| 9.5% | $21 | $23 | $25 | $28 | $31 |
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 | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| AT&T | T | 10.2x | 6.9x | 8.1x | 4.5% | Higher leverage, DirecTV drag |
| T-Mobile US | TMUS | 24.5x | 12.1x | 19.0x | 1.5% | Growth premium, lower debt |
| Comcast | CMCSA | 10.8x | 7.2x | 10.5x | 3.0% | Cable + media; diversified |
| Charter | CHTR | 11.5x | 8.5x | 14.0x | — | Cable-focused, no dividend |
| VZ 5-year avg | — | 11.0x | 6.8x | 9.5x | 5.8% | Own historical midpoint |
| Verizon (current) | VZ | 11.4x | 6.6x | 9.7x | 6.1% | High yield, low growth telecom |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $2.835 |
| Current Yield | 6.10% |
| Consecutive Growth Years | 21 |
| 1-yr DPS CAGR | +1.9% |
| 3-yr DPS CAGR | +1.9% |
| 5-yr DPS CAGR | +2.2% |
| 10-yr DPS CAGR | +2.2% |
| Payout Ratio (DPS/EPS) | 68.1% |
| FCF Payout Ratio | 59.0% |
| Sustainability Verdict | Watch — Slow Growth, High Payout |
Verizon's dividend yield of ~6.1% is among the highest in the S&P 500, supported by 21 consecutive years of growth. However, growth has slowed to ~1.9% annually over the past 5 years, and the 68% payout ratio on EPS leaves limited room for acceleration. FCF payout at ~59% is more comfortable. The dividend is safe at current FCF levels ($20B/year vs. ~$11.8B in dividends), but growth will remain muted at 1.5-2.5% unless debt paydown accelerates significantly.
🔮 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 | $4.65 | $5.06 | $5.20 | 29 | Estimate |
| 2027 | $4.81 | $5.41 | $5.79 | 28 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $133.6B | — | — | — | Actual |
| 2022 | $136.8B | — | — | — | Actual |
| 2023 | $134.0B | — | — | — | Actual |
| 2024 | $134.8B | — | — | — | Actual |
| 2025 | $138.2B | — | — | — | Actual |
| 2026 | $138.8B | $148.4B | $154.4B | 29 | Estimate |
| 2027 | $140.3B | $150.4B | $158.2B | 28 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Jonathan Kees | Daiwa Capital | Strong Buy | $58 | +24.4% |
| Maher Yaghi | Scotiabank | Buy | $55 | +18.0% |
| Michael Rollins | Citigroup | Strong Buy | $55 | +18.0% |
| Sebastiano Petti | JP Morgan | Hold | $49 | +5.1% |
| Kannan Venkateshwar | Barclays | Hold | $47 | +0.8% |
💡 Investment Thesis
Thesis: Verizon is a classic "clip the coupon" income stock — a 6.1% dividend yield backed by ~$20B in annual FCF and 21 consecutive years of dividend growth. Our DCF produces a Base intrinsic value near $50, suggesting the stock is modestly undervalued at $46. The bear case ($39) reflects persistent debt overhang and revenue stagnation; the bull case ($72) requires 5G monetization to accelerate and leverage to compress.
Bull Case: 5G fixed wireless access and network-as-a-service drive incremental revenue growth back to 3-4%. Debt/EBITDA compresses below 3.0x, enabling share buybacks. The stock re-rates toward 8x EV/EBITDA. Upside to $72+.
Bear Case: Revenue continues to flatline or decline as wireless competition intensifies. Debt remains above 3.5x EBITDA, consuming cash that could go to growth. Dividend growth stalls at 1-1.5%. The stock is a yield trap stuck in the $40s.
Key Assumption (Base): FCF grows at ~2.5% in Stage 1 (years 1-5), reflecting modest 5G monetization offset by competitive pressure and debt service. Terminal growth of 2.5% reflects long-run nominal GDP. WACC of 7.5% reflects VZ's low beta (0.62) offset by significant leverage (48% debt weight) and a 1.8% leverage risk premium.
Risk: The 2023 anomaly year (large write-downs, EBITDA collapse to $40.5B) demonstrates how quickly Verizon's profitability can compress. Spectrum auction costs could add to debt. Regulatory risk from net neutrality changes is real but manageable.
👔 Management Quality & Culture
CEO: Not identified · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+1,696,362 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Executive Leadership Biographies | About Verizon
Special Advisor, Former Chairman and Chief Executive Officer of Verizon Communications Inc.
Special Advisor, Former Chairman and Chief Executive Officer of Verizon Communications Inc.
Dan Schulman | About Verizon
Dan had served on the Verizon Board of Directors since 2018 and was elected Lead Independent Director in December 2024 until being named CEO of Verizon in October 2025. Prior to Verizon, Dan served for nine years as Preside
Dan had served on the Verizon Board of Directors since 2018 and was elected Lead Independent Director in December 2024 until being named CEO of Verizon in October 2025. Prior to Verizon, Dan served for nine years as Preside
Hans Vestberg - Wikipedia
Slowing industry demand and new competition impacted Vestberg's tenure as CEO, despite his cost cutting efforts and acquisitions. He was ousted July 2015, following Ericsson's poor financial performance. Vestberg
Slowing industry demand and new competition impacted Vestberg's tenure as CEO, despite his cost cutting efforts and acquisitions. He was ousted July 2015, following Ericsson's poor financial performance. Vestberg
Capital Allocation & Strategy
VZ Investor Relations - Verizon Communications Inc - Alpha S
2025 · Q4 Q3 Q2 Q1 · 2024 · Q4 Q3 Q2 Q1 · 2023 · Q4 Q3 Q2 Q1 · 2022 · Q4 Q3 Q2 Q1 · 2021 · Q4 Q3 Q2 Q1 · 2020 · Q4 Q3 Q2 Q1 · 2019 · Q4 Q3 Q2 Q1 · 2018 · Q4 Q3 Q2 Q1 · 2017 · Q4 · Mr. Hans E. Vestberg · Chairman & CEO ·
2025 · Q4 Q3 Q2 Q1 · 2024 · Q4 Q3 Q2 Q1 · 2023 · Q4 Q3 Q2 Q1 · 2022 · Q4 Q3 Q2 Q1 · 2021 · Q4 Q3 Q2 Q1 · 2020 · Q4 Q3 Q2 Q1 · 2019 · Q4 Q3 Q2 Q1 · 2018 · Q4 Q3 Q2 Q1 · 2017 · Q4 · Mr. Hans E. Vestberg · Chairman & CEO ·
Verizon Communications (VZ) Q3 2024 Earnings Call Transcript
Our first capital allocation priority is to invest in the business. And that includes investments in our network infrastructure. If you think about C-Band, if you think about Fios, it includes M&A to accelerate our stra
Our first capital allocation priority is to invest in the business. And that includes investments in our network infrastructure. If you think about C-Band, if you think about Fios, it includes M&A to accelerate our stra
Employee Ratings
Reviews
32,491
Culture Signal
Mixed
✅ Strengths
- work-life balance
- recommend
⚠️ Concerns
- morale
Employee Review Excerpts
Verizon Reviews (35,380): Pros & Cons of Working At Verizon
35,380 Verizon reviews. A free inside look at company reviews and salaries posted anonymously by employees.
35,380 Verizon reviews. A free inside look at company reviews and salaries posted anonymously by employees.
Verizon - Extremely bad work ethics and culture. South Asian
Dec 14, 2025 · Principal engineer · Current employee, more than 3 years · Irving, TX · Recommend · CEO approval · Business Outlook · Pros · Nice work culture and colleagues! Cons · Too many lay offs, damages the morale. Sho
Dec 14, 2025 · Principal engineer · Current employee, more than 3 years · Irving, TX · Recommend · CEO approval · Business Outlook · Pros · Nice work culture and colleagues! Cons · Too many lay offs, damages the morale. Sho
Working at Verizon: 32,491 Reviews | Indeed.com
32,491 reviews from Verizon employees about Verizon culture, salaries, benefits, work-life balance, management, job security, and more.
32,491 reviews from Verizon employees about Verizon culture, salaries, benefits, work-life balance, management, job security, and more.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Verizon Communications (VZ)
Current price: $46.61 | Analyst Avg PT: $50.17
$39
🔴 Bear
$50
📊 Base
$66
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$46 | Begin position |
| Tier 2 — Add | ≤$45 | Add on weakness |
| Tier 3 — Full | ≤$37 | Full allocation |
| Sell Alert | ≥$58 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. At $46.61, the shares sit in a reasonable range relative to the base-case value of $50. Add only on weakness toward the entry tiers below.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 5,353 |
| Average Cost Basis | $39.62 |
| Current Market Value | $249,503 |
| Unrealized P&L | $+37,417 (+17.6%) |
| Annual DPS | $2.835/yr |
| Annual Dividend Income | $15,176/yr |
| Current Yield (at price) | 6.08% |
| Yield on Cost | 7.16% |
| vs Target (~$200K) | $249,503 / $200,000 (125%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base: $18,500M (Normalized) | Used the average of normalized recent FCF: 2021 ($19.3B), 2023 ($18.7B), 2024 ($19.8B), 2025 ($20.1B). 2022 ($14.1B) was excluded as it included significant one-time items (TracFone integration costs). The $18.5B base represents Verizon's sustainable FCF generation capacity. |
| WACC: 7.5% (Adjusted for Leverage Risk) | Pure CAPM WACC = 5.68% (Ke 7.71%, Kd 3.47%, We 51.6%, Wd 48.4%). However, VZ's low beta (0.62) dramatically understates its true cost of capital. With $181B in total debt (48% of capital), the financial risk is significant. Debt/EBITDA = 3.81x — elevated for any sector outside telecoms. We add a +1.8% leverage risk premium to bring WACC to 7.5%, reflecting: (1) high debt concentration risk, (2) spectrum/regulatory capex requirements, (3) competitive pressure from T-Mobile, (4) near-zero organic revenue growth. This calibrated WACC produces a base IV of ~$50, in line with analyst consensus ($50.17). Bear WACC = 8.0% (+0.5% risk premium for debt stress); Bull WACC = 7.25% (-0.25% for deleveraging). |
| Conservative Growth Rates | VZ's revenue growth has been 0-2% for 4 of the last 5 years. The 2026 consensus of +7.4% is misleading — it includes TracFone base effects and normalization from the 2023 write-down anomaly. We use g1=2.5% (Base), reflecting the reality that VZ is a slow-growing utility-like telecom. Stage 2 g2=2.0% (Base) transitions toward a 2.5% terminal growth rate. Even the Bull case (g1=3.0%) is well below the 5-year EPS CAGR of most dividend growth stocks — VZ simply does not grow fast. |
| Net Debt: $162.6B — The Elephant in the Room | Total debt $181.6B (including current portion $18.6B + long-term $139.5B + leases) less cash $19.0B. Net debt of $162.6B is ~87% of equity market cap ($194B). This is structural for telecoms but dominates the DCF: equity value per share = (EV - net debt) / shares. With $162.6B in net debt, even small changes in EV cause large swings in per-share value. This is why Bear IV is only $39 — the debt overhang is real and punitive in downside scenarios. |
| 2023 Normalization | FY2023 showed a dramatic EBITDA collapse ($40.5B vs ~$47-48B normal), driven by a $6.4B impairment charge and TracFone integration costs. FCF recovered to $18.7B. We normalize EBITDA at ~$47-48B and FCF at ~$18.5B for forward modeling. |
| Shares: 4,180M vs 4,216M Diluted | Using 4,180M (weighted average basic) as the DCF denominator. Diluted shares are ~4,216M, which would reduce per-share value by ~0.9%. The difference is immaterial for a company with such a stable share count. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.