Vodafone Group Public Ltd Co (NASDAQ: VOD)

Sector: Communication Services Industry: Telecom Services CIK: 0000839923
Market Cap 44.88 Bn
P/B 0.31
P/E 3.20
P/S 0.62
ROIC (Qtr) 0.00
Div Yield % 9.69
Rev 1y % (Qtr) 0.00
Total Debt (Qtr) 60.54 Bn
Debt/Equity (Qtr) 0.97
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About

Vodafone Group Public Ltd Co, known by its stock symbol VOD, is a prominent player in the telecommunications industry. The company's operations span across various countries, providing a diverse range of services and products to individuals, businesses, and governments. Vodafone's primary source of revenue is the sale of mobile telecommunications services, which includes voice and data services. The company also generates income from the sale of handsets and other devices. Its main offerings are mobile voice and data services, fixed-line broadband,...

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Investment thesis

Bull case

  • Operating cash flow of 17.44B provides exceptional 30.31x coverage of minority interest expenses 575.29M, showing strong core operations.
  • Strong operating cash flow of 17.44B provides 1.72x coverage of SG&A expenses 10.12B, showing efficient operational cost management.
  • Robust free cash flow of 12.05B exceeds capital expenditure of 5.39B by 2.24x, indicating strong organic growth funding capability.
  • Retained earnings of (145.13B) provide strong 56.05x coverage of other current liabilities (2.59B), indicating earnings quality.
  • Cash position of 8.34B provides exceptional 14.49x coverage of minority interest expenses 575.29M, indicating strong liquidity.

Bear case

  • Operating cash flow of 17.44B barely covers its investment activities of (2.04B), with a coverage ratio of -8.53, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 17.44B provides thin coverage of dividend payments of (1.35B) with a -12.96 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 8.34B provide limited coverage of acquisition spending of 9.25B, which is 0.90x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 19.12B relative to inventory of 844.71M (22.64 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 12.05B represents just -1.10x of debt issuance (10.98B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments [axis] Breakdown of Revenue (2023)

Peer comparison

Companies in the Telecom Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMUS T-Mobile US, Inc. 247.58 Bn 22.52 2.80 118.74 Bn
2 T At&T Inc. 210.50 Bn 12.86 1.15 155.04 Bn
3 VZ Verizon Communications Inc 202.20 Bn 11.00 1.54 181.64 Bn
4 CMCSA Comcast Corp 180.83 Bn 58.43 5.08 98.94 Bn
5 VOD Vodafone Group Public Ltd Co 44.88 Bn 3.20 0.62 60.54 Bn
6 CHT Chunghwa Telecom Co Ltd 33.41 Bn 26.87 4.32 1.20 Bn
7 SATS EchoStar CORP 32.60 Bn -2.52 2.15 30.58 Bn
8 CHTR Charter Communications, Inc. /Mo/ 32.03 Bn 6.42 0.58 96.20 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.03 0.87
EV to Cash from Ops. EV/CFO 7.35 7.73
EV to Debt EV to Debt 2.57 40.31
EV to EBIT EV/EBIT 11.04 2.24
EV to EBITDA EV/EBITDA 20.77 2.53
EV to Free Cash Flow [EV/FCF] EV/FCF 11.61 33.34
EV to Market Cap EV to Market Cap 3.47 1.71
EV to Revenue EV/Rev 2.16 5.12
Price to Book Value [P/B] P/B 0.31 2.16
Price to Earnings [P/E] P/E 3.20 76.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio -4.09 -0.17
Dividend Payout Ratio % Dividend Payout Ratio % -25.50 2.05
Dividend per Basic Share Div per Share (Qtr) 0.50 0.79
FCF Dividend Payout Ratio % FCF Dividend Payout Ratio % 12.75 8.04
Interest Coverage Interest Coverage 0.00 -2.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % -20.16 19.27
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 7.08 61.85
Dividend Growth (1y) % Div 1y % (Qtr) -48.86 -2.07
EBIAT Growth (1y) % EBIAT Growth (1y) % -244.60 373.65
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 192.47
EBIT Growth (1y) % EBIT Growth (1y) % -153.43 814.56
EBT Growth (1y) % EBT Growth (1y) % -153.43 -29.03
EPS Growth (1y) % EPS Growth (1y) % -284.93 141.81
FCF Growth (1y) % FCF Growth (1y) % -14.08 78.17
Gross Profit Growth (1y) % Gross Profit Growth (1y) % 8.45 -10.71
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Utilization Ratio 0.35 0.60
Cash Payout Ratio Cash Payout Ratio 0.06 0.06
Cash Ratio Cash Ratio (Qtr) 0.33 0.68
Current Ratio Curr Ratio (Qtr) 1.16 1.56
Debt to Equity Ratio Debt/Equity (Qtr) 0.97 -0.46
Interest Cover Ratio Interest Cover Ratio 0.00 -2.53
Times Interest Earned Times Interest Earned 0.00 -2.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 46.49
EBIT Margin % EBIT Margin % -3.45 -51.60
EBT Margin % EBT Margin % -4.06 27.73
Gross Margin % Gross Margin % 32.90 55.49
Net Profit Margin % Net Profit Margin % -10.30 26.33