Verizon Shares Jump on Strong Subscriber Growth and Buyback. Is It Too Late to Buy the Stock?

Core Insights - Verizon's new CEO Daniel Schulman announced a strategic shift towards a customer-focused approach to address the loss of wireless customers, resulting in the highest quarterly net subscriber additions since 2019 [1][9]. Subscriber Growth - In the latest quarter, Verizon added 1 million net subscribers, including 616,000 postpaid phone subscribers and 372,000 broadband net additions, which comprised 319,000 fixed wireless subscribers and 67,000 Fios households [5]. - Consumer revenue increased by 3.2% year over year to $28.14 billion, while service revenue rose by 0.9% [6]. Financial Performance - Overall revenue grew by 2% year over year to $36.4 billion, with service revenue slightly up by 0.1% to $28.2 billion and wireless equipment revenue increasing by 9.1% to $8.2 billion [5]. - Adjusted EPS decreased by 0.9% to $1.09, and EBITDA fell by 0.6% to $11.9 billion [6]. Future Projections - Verizon anticipates adding between 750,000 to 1 million postpaid phone subscribers in 2026, with mobility and broadband service revenue expected to rise by 2% to 3% [7]. - Adjusted EPS is projected to increase by 4% to 5%, reaching between $4.90 and $4.95 [7]. Shareholder Returns - The company announced a $25 billion buyback plan to be executed over the next three years, supported by a projected 7% increase in free cash flow to $21.5 billion [8]. - Verizon's dividend is considered secure, well-covered by free cash flow, and the buyback is expected to support its stock price [10]. Competitive Positioning - Verizon aims to stop the trend of losing customers to competitors, with impressive net additions in Q4 and opportunities for cross-selling and bundling following the acquisition of Frontier Communications [9]. - The stock trades at a forward P/E ratio of 9.2 based on 2026 earnings estimates, compared to 11.3 for AT&T, with a forward yield of 6.5%, making it an attractive dividend stock [10].