Picture supply: Vodafone Group plc
Throughout a variety of metrics, Vodafone‘s (LSE:VOD) share value appears to supply super worth proper now. Actually, I’d even go as far as to say that — on paper no less than — I believe 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 instances for the present monetary 12 months (to March 2026). To place that into perspective, its 10-year common a number of stands considerably larger at round 19 instances.
Moreover, Vodafone’s a number of sits under the UK blue-chip common of 11.6 instances. 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 proportion factors above the Footsie common.
And at last, Vodafone shares additionally look low cost primarily based on the corporate’s guide worth (whole belongings/whole liabilities). This sits under the extensively accepted worth watermark of 1, at 0.4.
Nevertheless, the enterprise continues to face challenges in key markets, which some might say is pretty mirrored by its rock-bottom valuation. So is the FTSE agency actually a bona fide discount at at present’s costs?
The bear case
The newest yearly financials this month (20 Could) 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 beneath the cosh after bundling TV companies into multi-dwelling unit (MDU) rents was banned in 2024.
Natural service revenues within the Central European nation sank 5%. But adjustments 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 cellular 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 Could’s report additionally indicated robust performances elsewhere. Natural service revenues development within the UK, Turkey, and the remainder of Europe meant corresponding gross sales at group degree have been up 2%.
In Africa, natural gross sales leapt 11.3% 12 months on 12 months as buying and selling impressed in Egypt and South Africa. Africa may stay profitable trying forward amid strong 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 12 months, 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 discount’ may be fairly subjective. However whereas it’s not with out threat, I believe Vodafone additionally has appreciable long-term funding potential. And I don’t assume 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 12 months to 10% throughout fiscal 2026. And it’s tipped to choose up additional subsequent 12 months, to 13%.
I believe Vodafone may very well be destined for sustained development from this level onwards, as growing digitalisation drives demand for its companies so is value contemplating.
