Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Verizon Communications Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.4% to 2.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 61, DIO 12). At a 6.4% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 6.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $43.69 per share, suggesting VZ is fairly valued by 14.0% at the current price of $50.80.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 26,675 | 26,980 | 27,224 | 27,493 | 28,060 | 28,762 |
| (−) Net Interest | 5,523 | 5,586 | 5,636 | 5,692 | 5,809 | 5,955 |
| (+) D&A | 20,159 | 20,394 | 19,388 | 20,016 | 20,843 | 21,364 |
| EBITDA | 52,356 | 52,960 | 52,249 | 53,201 | 54,712 | 56,080 |
| (−) Tax | 6,360 | 6,433 | 6,491 | 6,555 | 6,690 | — |
| (−) CapEx | 21,464 | 21,710 | 21,906 | 22,122 | 22,579 | — |
| (−) ΔWC | 10,935 | 191 | 153 | 169 | 356 | — |
| Free Cash Flow (FCF) | 13,596 | 24,626 | 23,698 | 24,355 | 25,087 | — |
| Peers' EBITDA Multiple | 6.6x | |||||
| Terminal Value | 370,688 | |||||
| WACC / Discount Rate | 6.40% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 13,181 | 22,438 | 20,294 | 19,602 | 18,977 | 271,851 |
| Enterprise Value | 366,344 | |||||
| Projection Period | 94,494 | 25.8% | ||||
| Terminal Value | 271,851 | 74.2% | ||||
| (−) Current Net Debt | 181,546 | |||||
| Equity Value | 184,798 | |||||
| (÷) Outstanding Shares | 4231M | |||||
| Fair Price | $44 | -14.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 2.6x | 4.6x | 6.6x | 8.6x | 10.6x |
|---|---|---|---|---|---|
| 4.4% | $8 | $30 | $51 | $73 | $94 |
| 5.4% | $7 | $27 | $47 | $68 | $88 |
| 6.4% | $5 | $24 | $44 | $63 | $83 |
| 7.4% | $3 | $22 | $40 | $59 | $77 |
| 8.4% | $2 | $19 | $37 | $55 | $72 |
Current price: $50.80. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.