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After releasing half-year outcomes on November 11, Vodafone (LSE: VOD) shares rose to a 52-week excessive. The share value is up round 50% from ranges in April. Efficiency was robust, income was rising and revenue and money movement 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, buyers may surprise the place the 94p share value will go from right here. It’s, keep 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 ‘lifeless cat bounce’ from a inventory that needs to be averted in any respect prices?
Early days
Beneath 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 elements of the enterprise and doubling down on the stronger elements. The newest information suggests issues are heading the proper course.
Germany is Vodafone’s greatest market; due to this fact a latest return to progress there’s very constructive certainly. Africa confirmed energy too in a rising market. Competitor within the area Africa Airtel being up 158% this 12 months reveals what is perhaps attainable 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 may very well be one more avenue for progress.
Excellent news
Probably the most pleasing information for buyers got here from its announcement on dividends and buybacks. The share value jumped 8% on the day, giving some concept what the markets considered it.
Dividends-wise, Vodafone is shifting 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 finally 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 value as buybacks. Vodafone confirmed one other €500m is being put in the direction of share buybacks. The overall bundle 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 value upwards too.
I keep in mind writing about this inventory a few years in the past and concluding it was in a reasonably tough place. Issues look significantly better now. I’d say it’s a inventory buyers might want to take into account. As for my very own choice, I nonetheless suppose there are higher alternatives on the market in the mean time for the kind of portfolio I’m attempting to construct.
