Verizon Outpaces Its Industry in a Year: How to Play the Stock?

Core Insights - Verizon Communications Inc. (VZ) has outperformed the Wireless National industry with a 4.4% gain over the past year, while the industry itself declined by 1.7% [1] - The stock has underperformed compared to the Zacks Computer & Technology sector and the S&P 500 during the same period [1] Performance Comparison - Verizon shares have outperformed T-Mobile US, Inc. (TMUS), which declined by 8.1%, but underperformed AT&T, Inc. (T), which returned 9.3% [2] Market Trends and Opportunities - Global enterprises are rapidly transforming digitally, driven by hybrid work models, cloud transitions, and automation, necessitating robust connectivity [3] - The 5G infrastructure market is projected to grow at a 13.1% compound annual growth rate (CAGR) from 2026 to 2033, while the 5G services market is expected to grow at a 62.2% CAGR from 2025 to 2030 [4] Strategic Initiatives - Verizon has signed a multi-year agreement with Array Digital, enhancing its 5G network through access to 4,400 tower sites across the U.S. [5] - The company launched a new 5G Network Slice - Enhanced Internet solution, offering 200 Mbps downlink and 45 Mbps uplink without data caps, aimed at sectors like logistics and public safety [6] Competitive Landscape - Verizon faces intense competition from T-Mobile and AT&T in a saturated U.S. wireless market, where customer acquisition often requires discounts and promotional activities, impacting margins [10] - The company has high capital expenditures to support its 5G Ultra Wideband network and fiber asset deployment, raising concerns about the timing of returns on these investments [11] Financial Outlook - Earnings estimates for 2025 have decreased by 0.43% to $4.68, and for 2026, they have declined by 1.02% to $4.83 over the past 60 days [13] - Verizon's shares are trading at a price/earnings ratio of 8.4, which is lower than the industry average of 11.55, indicating a relatively cheaper valuation [14] Long-term Growth Potential - The expansion of Verizon's 5G portfolio and innovative solutions like network slicing are expected to enhance prospects across multiple sectors [16] - Collaboration with Array Digital is anticipated to streamline the expansion of 5G and other wireless services, potentially yielding long-term benefits [16]