A new value analysis ofVodafone Plc (LSE:VOD), a company listed on the London Stock Exchange, has been added to our research pageshere. Vodafone provides mobile and fixed line telecommunications services in Europe, the Middle East, Africa and Asia Pacific through the Company’s subsidiary undertakings, joint ventures, associated undertakings and investments.
We last analysed Vodafone in 2018, just before Vodafone borrowed €14 billion partly to finance the acquisition of Liberty Global. Since 2018 Vodafone has completed multiple sales and purchases of assets, as it looks to implement a strategy focussed on Germany and Eastern Europe plus Africa.
The changes since 2018 makes comparisons with prior years difficult. A further complicating factor is the ‘adjusted earnings’, as defined in the 2020 Annual report give a much different picture to ‘reported earnings’. An investor in the common stock of Vodafone needs to assess the impact of the new debt and the related value of the transactions completed since 2018, whilst also considering whether adjusted earnings are aa sensible way to view the earnings power of the company.
Vodafone changed its reporting currency to Euros in 2015, which makes comparison with years prior to 2015 more problematic. You can see the impact of the changes on the share price in the chart below.
The attached analysis report will give some guidance on how to view the debt position and the adjusted earnings numbers relative to the price of the common stock.
IBefore making an investment in VOD each value investor should consider their own level of sophistication. Defensive value investors or novice value investors would not consider an investment in VOD common stock. The defensive value investors should use reported earnings to assess the price against earnings to get an idea of value. Only investors who are comfortable with the difference between adjusted and reported earnings can consider an investment in VOD common stock.
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