T-Mobile or Verizon: Which Stock Should You Buy?

2026-07-12 · By Lubin Danilo, founder of Lubin Investment

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T-Mobile and Verizon are two American telecom giants, but very different in my screener. T-Mobile has the better quality (cash growth, lighter structure), Verizon trades far cheaper but is stagnating. Neither is perfect: here is what really sets them apart.

Two giants in the same sector, two opposite profiles

T-Mobile US and Verizon Communications are two of the three largest mobile telecom carriers in the United States, each with tens of millions of subscribers. On paper, they're direct competitors. In my 10-criteria screener, though, they score differently: 7 out of 10 for T-Mobile, 6 out of 10 for Verizon. And behind those two close scores hides a very different valuation story.

T-Mobile: the better cash momentum of the two

T-Mobile posts a free cash flow margin (money genuinely available after all expenses) of 19.2%, versus 26.8% for Verizon, a figure that looks favorable to Verizon at first glance. But the real difference lies elsewhere: T-Mobile's free cash flow per share growth has exploded, +126% over the recent measured period, while Verizon's declines 0.9% a year. T-Mobile keeps digesting the efficiency gains from its merger with Sprint (completed in 2020), fueling a far more dynamic cash trajectory than its two historic rivals.

Verizon: growth that has stalled

Verizon suffers from a deeper structural problem: its sales grow only 0.6% a year on average over 5 years, and its free cash flow per share is slightly declining. The US mobile market is mature, almost saturated, and Verizon, the legacy carrier, struggles more to find growth drivers than T-Mobile, which keeps gaining market share in 5G and fixed wireless broadband (home internet access via the mobile network, a segment Verizon and T-Mobile have been fiercely fighting over in recent years).

The price: Verizon far cheaper, but why?

This is where the gap becomes spectacular. Verizon trades at only 4.7 times its annual free cash flow (P/FCF), one of the lowest multiples in my entire screener, versus 11.9 times for T-Mobile. A P/FCF of 4.7 is extremely low, normally reserved for companies in real decline or facing very pessimistic market conditions. My model puts Verizon's reasonable buy price at $40.89, against a current price of $42.12, a stock therefore trading almost at its fair value. For T-Mobile, the picture is trickier to interpret: my model shows a buy price of $486.80 against a current price of $187.61, a huge gap that largely rests on an assumption of massive, continued buybacks. I'd rather stay cautious about this specific figure than present it as a certainty: T-Mobile's sales growth is only 1.3% a year, a pace that doesn't on its own justify such an aggressive future cash projection.

So, which one to choose?

This isn't a question of the "better company" in absolute terms, but of what you're looking for. T-Mobile has the stronger operational momentum of the pair, driven by the Sprint integration and continued market share gains. Verizon, by contrast, trades at a price that already largely reflects its sluggish growth, limiting the risk of a nasty surprise if the business simply stays stable. Neither scores a perfect mark in my screener: both carry high net debt relative to available cash, a common trait in a telecom sector that must invest massively in its networks.

How I use this comparison in my method

I never make a broad sector-wide bet. What this comparison illustrates is that within the same mature sector, two seemingly similar companies can have very different cash trajectories and valuations. My screener's whole job is precisely to separate these two dimensions, quality and price, for each dossier, rather than judging an entire sector as a block.

• T-Mobile (7/10) shows the stronger cash momentum, driven by the Sprint integration and market share gains
• Verizon (6/10) suffers from near-zero growth (0.6%/yr) but trades at only 4.7 times its annual cash flow
• Verizon trades almost exactly at its fair price ($40.89 vs $42.12) according to my model
• T-Mobile's buy price ($486.80) rests on an assumption of massive buybacks, to be taken with caution
• Both carriers share high net debt, a common trait across the telecom sector

FAQ

Why does T-Mobile score better than Verizon?

T-Mobile benefits from far stronger free cash flow per share growth, driven by its Sprint merger integration and continued market share gains, while Verizon stagnates with sales growth near zero.

Why is Verizon so cheap (P/FCF 4.7x)?

The market is pricing in very weak or no growth for Verizon, which justifies a low multiple. It's not necessarily a valuation mistake: it's the normal price for a mature company with stagnant growth.

Is T-Mobile's buy price ($486.80) reliable?

Take it with caution: this figure largely rests on an assumption of massive, continued buybacks, while T-Mobile's sales growth remains modest (1.3% a year). I'd rather rely more on the current P/FCF (11.9x) to judge the immediate price.

Are telecoms a good sector for my quality screener?

It's a sector that rarely scores perfectly because of massive network investment and the resulting debt. But some companies, like T-Mobile here, do better than others thanks to stronger cash growth momentum.

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About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).