Here’s Why Vodafone Should Be on Your Watchlist

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Telecommunications operator Vodafone Group (VOD) recently highlighted concerns about rising inflation and rising economic instabilities that could impede its growth. However, given the increasing demand for telecommunications services and the increasing digitalization, the telecommunications giants are investing heavily in upgrading their services to meet the demand of customers for a rapid deployment of telecommunications services. 5G connectivity. In addition, considering VOD’s discount valuation and robust financial performance, we believe stocks can be a great addition to your watchlist. . – StockNews

Vodafone Group Corporation (VOD) is a multinational telecommunications company. The company offers mobile and landline services such as Internet, television (TV), voice and convergence services. The company’s shares have gained 4.8% over the past month and 3.3% over the past six months to close its last trading session at $ 15.59.

The company predicts that rising inflation and a challenging economic environment will limit its profitability this year and hinder its efforts to make deals. However, with the transition to hybrid work arrangements and cloud-based solutions, the demand for telecommunications services and the need for upgrades has grown dramatically over the past year. To keep up with customers’ wishes, telecommunications companies such as VOD are investing in next-generation communications infrastructure and faster deployment of 5G connections. Analysts expect the global telecommunications services market to arrive $ 2.47 trillion in 2028registering a CAGR of 5.4%.

Here’s what could shape short-term VOD performance:

Positive developments

In April, VOD and Sky launched social broadband pricing for low-income families in the UK as VOD expands their mobile contracts at social rates. Social rates are offered to 4.2 million universal credit consumers. Vodafone said it anticipated that the initiative would help households severely affected by the cost of living problem. Your Voxi network will provide unlimited 5G internet, calls and text messages to benefit recipients for £ 10 for up to six months.

In addition, VOD intends to prevent traffic accidents by launching a massive mobile alert system that provides real-time updates on the country’s roads. The new network of the mobile operator aims to reduce traffic congestion and travel times by providing real-time data on incidents and delays in automatic navigation systems and smartphone applications. ligents. The developers of the technology believe that one day it could prevent accidents by alerting the information system of the driver of pedestrians willing to go out on the road.

Solid finances

During the fiscal year ended March 30, 2022, total VOD revenue increased 4% year-over-year to $ 45.6 billion ($ 47.9 billion). His operating income it rose 11.1% year-on-year to 5.7 billion euros ($ 5.99 billion). The company’s profit for the year grew 389.6% from last year’s value to 2.62 billion euros ($ 2.75 billion), while its EPS grew significantly from quarter of the previous year to 7.20 million euros.

Discounted valuation

As for the future non-GAAP P / E, the stock is currently trading at 15.09x, 9.9% lower than the industry average of 16.74x. In addition, its 2.09 month EV / sales back is 4.9% lower than the industry average of 2.20 times. In addition, the price / cash flow of 3.35x VOD is 62.8% lower than the industry average of 8.99x.

POWR ratings reflect solid prospects

VOD has an overall rating of B, equivalent to a purchase rating on our property POWR ratings system. POWR scores are calculated taking into account 118 different factors, with each factor weighted to an optimal degree.

Our own rating system also evaluates each value based on eight different categories. VOD has a B rating for stability and value. Its 0.70 stock beta is consistent with the degree of stability. In addition, the lower multiples in the enterprise industry are synchronized with the degree of value.

Of the 46 actions in classification A Telecommunications – Foreigners industry, VOD ranks 21st.

Beyond what I said earlier, we have classified VOD by Feeling, Growth, Quality, and Momentum. Get all VOD scores here.

Bottom line

VOD has shown solid financial performance in the latest earnings release and, given its ongoing efforts to improve operating efficiency, the company is well positioned to capitalize on expanding market trends. In addition, given its discounted valuation and the core strength of the company, we believe that stocks can be a great addition to your watchlist.

How does Vodafone Group Public Limited Company (VOD) compare to its peers?

VOD has an overall POWR rating of B, which equates to a purchase rating. Check out these other shares of the same industry with A (Strong Buy) ratings: Telekom Austria AG (TKAGY), KT Corporation (KT) and Internet Initiative Japan Inc. (IIJIY).

VOD shares were trading at $ 15.45 per share on Monday morning, down $ 0.14 (-0.90%). To date, VOD has gained 6.45%, compared to a -20.04% increase in the S&P 500 benchmark over the same period.

About the author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. She majored in finance at the university and is currently pursuing the CFA program and is a Level II candidate.


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