Vodafone interim earnings: is a bottom for the share price now in?

After a tough 2018 and first half of 2019, Vodafone’s share price has stabilised and begun to move higher. Is there more to come?

When is Vodafone’s results date?

Vodafone publishes first-half (H1) earnings on 12 November.

Vodafone earnings – what does the City expect?

Vodafone continues its efforts to bring the Liberty Global assets acquired earlier in the year. On the one hand, its Liberty deal makes Vodafone a player in many European markets, especially the most important one, Germany. Having been present in these markets before, the Liberty deal now gives it the scale needed to compete properly with its peers. Vodafone is now the largest pay TV operator in Germany, and the biggest in Europe after Sky itself.

As a result, earnings are expected to rebound in the coming years, after years of weakness.

However, the firm is now burdened with a debt pile of over €50 billion as a result of the deal, causing concern for many investors. Even Vodafone cannot take on excessive amounts of debt, and the group has already cut its dividend to reduce cash outflow. The dividend was one of the strongest elements of the Vodafone investment case, but as a result of the cut earlier in the year this has been diminished.

Q1 saw a drop in service revenue, as well as weakness in Spain and South Africa. This is expected to moderate in Q2. Longer-term improvement in key areas such as the UK and Germany will be limited by stiff competition.

Earlier this year, Vodafone traded at 13.6 times forward earnings, its lowest in over five years. While the shares have become more expensive since then, at 20 times earnings, the valuation remains firmly below the five-year average of 28.

How to trade Vodafone’s earnings

Vodafone currently has a median target price of 187p, versus a current price of 160p. Of 26 analysts covering the stock, 18 have a ‘buy’ recommendation, while six have ‘holds’ and only two have ‘sell’ recommendations.

Volatility in Vodafone’s shares has been declining since August, with the 14-day average true range (ATR) just 2.7p, compared to 3.5p at the end of July. Narrower stop losses may be used so long as the 14-day ATR remains low.

Vodafone share price: technical analysis

Vodafone shares have managed to break out of the 2018 and 2019 downtrend, which saw them go from 220p to 120p by the middle of 2019. The price has now rallied above the 200-day simple moving average (SMA), and in September it hit 163p, its highest level since December 2018. Dips have proven to be buying opportunities, and with the daily moving average convergence/divergence (MACD) now poised to follow daily stochastics and provide a buying opportunity, we may see a fresh push higher, above 163p and on to new highs for the year.

Optimism reigns for Vodafone

After the uncertainty of 2018 and 2019, Vodafone seems to have found its footing. The shares have recovered, but remain relatively cheap, and the market has put the dividend cut behind it. If the firm can avoid further cuts to its payout and continue its European expansion, we may see the current uptrend move higher.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.