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Vodafone (LSE:VOD) stocks climbed quickly this time last year, up 15% in a few weeks. It was the first sign of life from FTSE 100 For years, Telecoms Group has been seduced to take a closer look.
That’s why I did it. And after weighing the numbers, debt, dividend outlook and trends in long-term stock prices, I came to a clear conclusion. I didn’t buy it.
For me, the risk was still outweighed the possibilities.
I have been a Vodafone skeptic for a long time and haven’t seen enough to change my mind with the story of recovery. I wasn’t drawn to the 10.4% yield at the time.
Also, I wasn’t sure that a long-standing turnaround was finally underway. I said I wouldn’t touch Vodafone’s stock on BargePole. So did I make the right phone call?
A warm appearance
A quick look at Vodafone’s stock price will calm your nerves. Inventory has grown by just 2.8% over the past 12 months. It’s not bad by its own standards, especially given the recent volatility. However, it is still behind the FTSE 100, which is up 6.2% over the same period.
FTSE 100 Rivals BT Group Last year, it brought about a 40% stock price surge, showing what a proper communications turnaround looks like. Vodafone doesn’t match that.
It has its strengths. The subsequent yield is still decent at 4.9%, with an index average comfortable above about 3.6%.
It’s not that expensive, with a price and return of 11.6.
Mixed signal
The group’s 2024 results, published on May 20, painted a complex picture. Total revenues rose 2% to 37.4 billion euros, while organic services revenues rose 5.1%.
There was strong growth in Africa and Türkiye, but strict regulations and fierce competition led to a 5% drop in Germany. Vodafone suffered an operating loss of 400 million euros, but the impairment charge of 4.5 billion euros did not help.
However, the board has announced a repurchasing of 2 billion euros. It should support stock prices in the short term.
CEO Margherita Della Valle claimed that Vodafone has “change”but I still need to see more evidence
Please look at it
Communications remain a difficult sector. It requires a lot of investment and there is little room for error. Vodafone’s net debt remains stubbornly at 33.9 billion euros. The Turnaround Story is authentic, but not perfect yet.
Analysts’ feelings reflect uncertainty. Of the 15 stock ratings, four are bought, four are sold, and the rest are sitting on the fence. That’s the biggest sales rate I’ve seen in a while.
Analysts predict that the median stock price target for the year will exceed 85p, making just 10% profitable from today’s price. When combined with yield, it could provide a 15% return. It will be a good year by Vodafone standards. I understand.
In some respects, the stocks we haven’t bought are just as important as what it was. So it’s worth looking back from time to time. Hopefully it’s not anger.
For now, I’m still looking for a better place to invest. Others may consider buying a Vodafone, but I have my own barge pole on hand.
