Picture supply: Vodafone Group plc
Throughout a variety of metrics, Vodafone‘s (LSE:VOD) share worth appears to supply large worth proper now. In reality, I’d even go as far as to say that — on paper no less than — I feel the telecoms big could also be one of many FTSE 100‘s biggest worth shares.
Its price-to-earnings (P/E) ratio’s 10.8 occasions for the present monetary yr (to March 2026). To place that into perspective, its 10-year common a number of stands considerably increased at round 19 occasions.
Moreover, Vodafone’s a number of sits under the UK blue-chip common of 11.6 occasions. A current dividend re-basement places the dividend yield at 5.5%, under a median of 6.8% for the previous decade. However that’s nonetheless round two share factors above the Footsie common.
And eventually, Vodafone shares additionally look low cost based mostly on the corporate’s e book worth (complete belongings/complete liabilities). This sits under the broadly accepted worth watermark of 1, at 0.4.
Nevertheless, the enterprise continues to face challenges in key markets, which some could say is pretty mirrored by its rock-bottom valuation. So is the FTSE agency actually a bona fide cut price at as we speak’s costs?
The bear case
The newest yearly financials this month (20 Might) emphasised the size of Vodafone’s enduring troubles in Germany, its single largest market. Even after investing huge quantities to reinvigorate gross sales, the enterprise remains to be underneath the cosh after bundling TV providers into multi-dwelling unit (MDU) rents was banned in 2024.
Natural service revenues within the Central European nation sank 5%. But modifications to bundling legal guidelines are solely half the story — stripping this out, service revenues nonetheless fell 2% within the interval, reflecting “a decrease fastened line buyer base and better aggressive depth within the cell market“.
The sale of core operations in Spain and Italy has helped considerably carry down Vodafone’s debt. However with troubles in Germany persisting, it’s raised questions too over how the enterprise will generate development.
The bull case
The excellent news is that Might’s report additionally indicated sturdy performances elsewhere. Natural service revenues development within the UK, Turkey, and the remainder of Europe meant corresponding gross sales at group stage had been up 2%.
In Africa, natural gross sales leapt 11.3% yr on yr as buying and selling impressed in Egypt and South Africa. Africa may stay profitable trying forward amid sturdy inhabitants development and hovering private wealth ranges.
In the meantime, at Vodafone Enterprise — an space which the FTSE firm has recognized as a key money-spinner — natural service revenues elevated 4%.
With the steadiness sheet in a greater place, too (web debt dropped by a 3rd final yr, to €22.4bn), the corporate’s in a stronger place to put money into its operations throughout these territories.
So what’s the decision?
OK, ‘biggest cut price’ may be fairly subjective. However whereas it’s not with out threat, I feel Vodafone additionally has appreciable long-term funding potential. And I don’t suppose that is proven within the cheapness of its shares.
Reflecting current restructuring, earnings development is tipped to speed up from 5% within the final monetary yr to 10% throughout fiscal 2026. And it’s tipped to select up additional subsequent yr, to 13%.
I feel Vodafone may very well be destined for sustained development from this level onwards, as rising digitalisation drives demand for its providers so is value contemplating.
