3 Reasons to Sell VZ and 1 Stock to Buy Instead

September 08, 2025 at 00:02 AM EDT

VZ Cover Image

Verizon has been treading water for the past six months, recording a small loss of 4.7% while holding steady at $44.31. The stock also fell short of the S&P 500’s 15.5% gain during that period.

Is there a buying opportunity in Verizon, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Do We Think Verizon Will Underperform?

We're swiping left on Verizon for now. Here are three reasons we avoid VZ and a stock we'd rather own.

1. Customer Base Hits a Plateau

Revenue growth can be broken down into the number of customers and the average spend per customer. Both are important because an increasing customer base leads to more upselling opportunities while the revenue per customer shows how successful a company was in executing its upselling strategy.

Over the last two years, Verizon’s total customers were flat, coming in at 146.1 million in the latest quarter. This performance was underwhelming and shows the company faced challenges in landing new contracts. It also suggests there may be increasing competition or market saturation. Verizon Total Customers

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Verizon’s revenue to rise by 2.2%. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

3. Cash Flow Margin Set to Decline

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Over the next year, analysts predict Verizon’s cash conversion will slightly fall. Their consensus estimates imply its free cash flow margin of 14.7% for the last 12 months will decrease to 13%.

Final Judgment

Verizon falls short of our quality standards. With its shares trailing the market in recent months, the stock trades at 9.4× forward P/E (or $44.31 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are superior stocks to buy right now. We’d recommend looking at one of Charlie Munger’s all-time favorite businesses.

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