Verizon Communications (VZ 0.10%) is a stock that's been struggling to gain any kind of momentum in recent years. Since 2020, it has lost around 35% of its value. It has produced lackluster results and hasn't been a top pick for many investors.
On Jan. 30, the company reports fourth-quarter earnings for 2025. And with its valuation being as low as it is, and a new CEO at the helm, could this be an opportune time to buy shares of Verizon before it posts its latest results?
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Do earnings reports typically move Verizon's stock?
Verizon is typically seen as a good blue chip stock, primarily for its long-term stability and dividend. Due to this, and its lack of significant growth, you wouldn't normally expect shares to surge or crash after the release of the numbers. And as you can see from the chart below, that typically hasn't been the case. While there may be the occasional earnings boost or sell-off, those are the exceptions rather than the norm.
Why this earnings report could be more important
CEO Dan Schulman took over in early October last year, replacing Hans Vestberg, so this upcoming earnings report will be Schulman's first full quarter as CEO. It will also be the first earnings report since Verizon announced more than 13,000 jobs would be cut amid a broad restructuring effort. Investors may be looking for early signs of progress that Schulman is effectively turning around the business. If there are such signs, they could give the lowly valued stock a boost.
NYSE: VZ
Key Data Points
Currently, the stock is trading at just eight times its trailing earnings, which is a steep discount given that the S&P 500 averages a price-to-earnings multiple of nearly 26. But it's arguably not just a Verizon problem, as telecom as a whole may not be that attractive a sector; rival AT&T also trades at around eight times its earnings. With interest rates remaining elevated and telecom companies carrying high debt loads and needing to invest heavily in capital-intensive projects, they may simply not be compelling investments, particularly when there are many hot growth stocks in tech to focus on.
But at a time when the market may be paying closer attention to valuations, a better-than-expected earnings report could shine a spotlight on the company. With the stock already offering a high yield of 6.8%, if it can also show that the business is moving in the right direction, the shares could become much more attractive in the near future.
Should you buy Verizon's stock today?
Verizon has been making investments in growing its network, including its planned acquisition of Frontier Communications, which could pay off significantly in the future. Although it may not be a terribly exciting growth stock to own, it's a crucial player in the telecom industry. Its dividend still looks safe with a payout ratio of less than 60%. And although the business is not rapidly expanding, it is relatively stable nonetheless.
Overall, this is not as bad a stock as it may look to be based on its recent performance, since investors may have simply prioritized growth stocks in recent years. But as investors begin to look for safety and stability amid concerning economic conditions, Verizon and other dividend stocks could come back into favor.
While I don't think its upcoming earnings report is likely to send the shares a whole lot higher, this does look to be an undervalued stock worth buying today. Its low valuation gives you a good margin of safety, and the dividend income will compensate you for being patient with the business over the long haul.
