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After releasing half-year outcomes on November 11, Vodafone (LSE: VOD) shares rose to a 52-week excessive. The share worth is up round 50% from ranges in April. Efficiency was sturdy, income was rising and revenue and money stream got here in on the higher finish of steerage. And the agency upped its dividend for the primary time in years.
With excellent news on all fronts, traders would possibly surprise the place the 94p share worth will go from right here. It’s, bear in mind, buying and selling at an enormous low cost if we evaluate it to a earlier excessive of over £5. May Vodafone be one of many FTSE 100‘s greatest bargains? Or is that this a ‘useless cat bounce’ from a inventory that needs to be averted in any respect prices?
Early days
Underneath the newish management of Margherita Della Valle (appointed CEO in April 2023), Vodafone is aiming for a significant turnaround. This has concerned job cuts, integrating AI, promoting off weak-performing components of the enterprise and doubling down on the stronger components. The newest information suggests issues are heading the best path.
Germany is Vodafone’s greatest market; due to this fact a latest return to progress there may be very optimistic certainly. Africa confirmed power too in a rising market. Competitor within the area Africa Airtel being up 158% this 12 months reveals what may be potential there.
The UK information revolves across the not too long ago accomplished merger of Vodafone UK and Three UK. The brand new entity, labelled VodafoneThree, was solely created in June. It’s nonetheless early days right here however this could possibly be one more avenue for progress.
Excellent news
Probably the most pleasing information for traders got here from its announcement on dividends and buybacks. The share worth jumped 8% on the day, giving some concept what the markets considered it.
Dividends-wise, Vodafone is transferring again to a progressive dividend coverage. In different phrases, the dividend ought to slowly rise within the years forward. The yield stands at 5.08% which places it among the many increased payers of the FTSE 100 already. This comes after years of barely inexpensive dividends that in the end led to a big discount.
Dividends are a pleasant ‘money in hand’ profit to proudly owning a inventory, however they don’t have the identical impact on the share worth as buybacks. Vodafone confirmed one other €500m is being put in direction of share buybacks. The overall package deal will likely be €4bn by the point it’s completed, a good sum in comparison with the agency’s market cap of €25bn. This might push the share worth upwards too.
I bear in mind writing about this inventory a few years in the past and concluding it was in a reasonably tough place. Issues look a lot better now. I’d say it’s a inventory traders might want to contemplate. As for my very own resolution, I nonetheless suppose there are higher alternatives on the market in the mean time for the kind of portfolio I’m making an attempt to construct.
