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Vodafone Group PLC ADR VOD

Morningstar Rating
$8.47 −0.13 (1.51%)
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Company Report

Vodafone: Remains Active in Its Mergers and Acquisitions Strategy; Maintaining Fair Value Estimate

Vodafone’s group service revenue, excluding Turkey, grew by 2.8% in third-quarter fiscal 2024 as its revenue in Germany slowly improved. Despite Vodafone facing challenges in Germany, where it is steadily losing share to Deutsche Telekom, and in Italy, where the market remains highly competitive, we believe management is making some right decisions. It is trying to merge its U.K. business with CK Hutchison and divest from Spain. We believe the firm will continue to have a hard time in Italy after rejecting Iliad’s merger offer, which valued Vodafone Italy at EUR 10.45 billion. According to Reuters, Vodafone could now pursue a deal with Swisscom’s Italian business Fastweb. We believe Fastweb would have a lower potential for synergies with Vodafone though, given its smaller size compared with Iliad. We maintain our GBX 125 fair value estimate and see the shares as undervalued.

Price vs Fair Value

VOD is trading at a 44% discount.
Price
$8.47
Fair Value
$47.00
Uncertainty
Medium
1-Star Price
$13.47
5-Star Price
$76.30
Economic Moat
Cxfq
Capital Allocation
Sfmvdcyy

Bulls Say, Bears Say

Bulls

If Vodafone management is more proactive in divesting noncore businesses and networks and simplifies its corporate structure, it could highlight the value of its assets, resulting in share price appreciation.

Bears

Vodafone’s position in Italy is precarious, given the structurally challenging competitive environment. Prices seem to have no floor, with commercial providers behaving irrationally and aggressively.

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News

Trading Information

Previous Close Price
$8.60
Day Range
$8.418.55
52-Week Range
$8.0212.24
Bid/Ask
$8.45 / $8.46
Market Cap
$22.94 Bil
Volume/Avg
25,642 / 8.1 Mil

Key Statistics

Price/Earnings (Normalized)
10.07
Price/Sales
0.47
Dividend Yield (Trailing)
11.45%
Dividend Yield (Forward)
11.45%
Total Yield
15.12%

Company Profile

Vodafone operates mobile and fixed-line networks and businesses in more than 20 countries. Its largest market is Germany, where it is the second mobile operator after Deutsche Telekom and owns a cable network after acquiring Kabel Deutschland in 2013 and Liberty Global Germany in 2019. In the U.K. and Italy, it acts as a mobile operator, while in Spain it offers converged services after the acquisition of cable operator Ono in 2014. Vodafone also has operations in several Central European and African countries, which combined represent around one third of revenue.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
93,095

Competitors

Valuation

Metric
VOD
ORAN
TEF
Price/Earnings (Normalized)
10.0711.8211.83
Price/Book Value
0.350.890.82
Price/Sales
0.470.670.54
Price/Cash Flow
1.442.461.78
Price/Earnings
VOD
ORAN
TEF

Financial Strength

Metric
VOD
ORAN
TEF
Quick Ratio
0.860.710.86
Current Ratio
0.890.850.95
Interest Coverage
5.223.753.16
Quick Ratio
VOD
ORAN
TEF

Profitability

Metric
VOD
ORAN
TEF
Return on Assets (Normalized)
2.36%2.71%2.02%
Return on Equity (Normalized)
6.07%9.33%8.86%
Return on Invested Capital (Normalized)
4.33%6.56%5.75%
Return on Assets
VOD
ORAN
TEF
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