Verizon Communications Inc.VZNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $190.93 per share(market-calibrated)

+282.0%

Upside to Fair Value

Current

$49.98

Pure Model

$223.41

Fair Value

$190.93

Bull Case

$269.52

Bear Case

$191.05

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $223.41.

What's Driving This Ratingfor VZ

↓

CapEx normalizing toward maintenance

Historical CapEx is 14.59% of revenue (heavy investment phase). Model fades this to 4.50% by Year 10, freeing up ~$17.4B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 21.59% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 4.36% revenue growth, fading to 3.00% by Year 10. Revenue reaches $172.8B (vs $138.2B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.94% indicates efficient cash generation. FCF reaches $42.9B by Year 10 (24.81% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.32

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)5.92%

Cost of Debt

Pre-tax Cost of Debt2.59%

Tax Rate22.34%

After-tax Cost of Debt2.01%

Equity Weight (E/V)51.29%

Debt Weight (D/V)48.71%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (51.29% × 5.92%) + (48.71% × 2.01%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$144.2B	$147.4B	$151.8B	$159.0B	$172.8B
EBIT	$31.1B	$31.8B	$32.8B	$34.6B	$37.8B
Tax	$7.0B	$7.1B	$7.3B	$7.7B	$8.4B
NOPAT	$24.2B	$24.7B	$25.4B	$26.8B	$29.3B
+ Depreciation	$18.2B	$18.6B	$19.1B	$20.1B	$21.8B
- Capex	$21.0B	$18.2B	$15.3B	$12.5B	$7.8B
- Δ NWC	$603M	$148M	$307M	$378M	$503M
Free Cash Flow	$20.7B	$25.0B	$29.0B	$34.0B	$42.9B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$19.7B	$21.3B	$22.2B	$23.4B	$25.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$42.9B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$1.8T

PV of Terminal Value$1.0T

Exit Multiple Method

Year 10 EBITDA$59.6B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$1.3T

PV of Terminal Value$767.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$225.2B

PV of Terminal Value$1.0T

Enterprise Value$1.3T

(-) Net Debt$181.5B

Equity Value$1.1T

Shares Outstanding4.2B

Price per Share$254.93

Exit Multiple Method

PV of Projected FCFs$225.2B

PV of Terminal Value$767.2B

Enterprise Value$992.4B

(-) Net Debt$181.5B

Equity Value$810.9B

Shares Outstanding4.2B

Price per Share$191.88

Pure Model Fair Value

$223.41

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
3.50%	$294.37	$280.51	$267.30	$254.72	$242.73
4.50%	$246.39	$280.51	$267.30	$254.72	$242.73
5.50%	$187.62	$202.53	$223.41	$254.72	$242.73
6.50%	$151.39	$159.38	$169.65	$183.35	$202.53
7.50%	$125.84	$130.65	$136.53	$143.87	$153.32

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$191.05

282.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.40

Base Case

$223.41

347.0% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.32

Bull Case

$269.52

439.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Communication Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth4.36%

Year 3 Revenue Growth1.02%

Year 5 Revenue Growth2.06%

Year 7 Revenue Growth2.44%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin21.59%

Terminal EBIT Margin22.00%

Tax Rate22.34%

Historical Capex / Rev14.59%

Terminal Capex / Rev4.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Communication Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance