VODAFONE GROUP PUBLIC LTD CO (VOD): what the price requires
At today's price, VODAFONE GROUP PUBLIC LTD CO (VOD) is priced for +0.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/VOD
Headline
| Field | Value |
|---|---|
| Ticker | VOD |
| Company | VODAFONE GROUP PUBLIC LTD CO |
| Sector / Industry | Communication Services |
| Current price | $15.74/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.7% |
| Operating margin (mid-cycle) | 9.2% |
| Margin compression implied | -4.5pp |
| Trailing margin (depressed year) | -1.1% |
| Implied growth | 0.8% |
| Multiple paid | 21x mid-cycle operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.2pp (computed at the 7% minimum rate; the CAPM rate 5.4% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~17.4%/yr; the models below use their own rates.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.07σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.71x | 2 | justifies |
| Earnings | 0.12x | 1 | justifies |
| Relative | 0.57x | 2 | justifies |
| Growth | 4.24x | 2 | expensive |
Families that justify the price: Asset, Earnings, Relative Families that call it expensive: Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=7)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $126.89 | 0.12x | no | FCF base $32.1B, growth -3% (input: historical growth), terminal g 0.5%, WACC 9.3%, 5yr projection |
| DCF Exit Multiple | Growth | $61.41 | 0.26x | no | Exit EV/EBITDA: 4.0x / 3.0x / 5.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $23.35 | 0.67x | yes | P/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | $6.87 | 2.29x | yes | DPS $1.17, g=-6.6% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $2.54 | 6.20x | yes | Stage 1: -39% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $23.53 | 0.67x | yes | Reference only (book value floor): BV/sh $23.53, ROE negative |
| Two-Stage Excess Return | Asset | $21.18 | 0.74x | yes | Reference only (book value with convergence): BV/sh $23.53, ROE converges to ke |
| Discounted Future Market Cap | Growth | $8.96 | 1.76x | no | Rev $40.7B, growth -3% (input: historical growth; tapered), Terminal P/S: 0.8x / 1.0x / 1.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $23.05 | 0.68x | no | Normalized EBIT (5y avg op income, one-time charges added back) $6.15B × (1−21%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $33.19 | 0.47x | yes | EBITDA $11.30B × sector EV/EBITDA 7.0x |
| FCF Yield | Earnings | $135.46 | 0.12x | yes | FCF $32052.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $23.35 | 0.67x | no | Revenue $40.70B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $34.9b |
| Net debt / NOPAT (after-tax) | 11.30x |
| Net debt / operating income (pre-tax) | 8.92x |
| Interest coverage | 1.8x |
| Share count CAGR (buyback) | -3.0% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 9.2%); the trailing year was depressed.
Bullet Takeaways
- Vodafone has spent two years shrinking to strength: it sold its Spanish and Italian units, took full control of the merged VodafoneThree in the UK, and pointed the proceeds at cutting debt and retiring stock, with the share count down about 3 percent a year.
- Germany, its largest market, is the swing factor: a July 2024 law let housing associations drop bulk cable-television contracts, costing Vodafone close to 3 million TV customers, and German service revenue only edged back to growth in the final quarter of fiscal 2026.
- The stock trades under the value its own book and the sector's cash-flow multiples imply, so the real debate is not whether it is cheap but whether a low-growth, heavily indebted operator deserves to be.
Bull Case
The clearest change at Vodafone is on the balance sheet and the share count, not the income statement. Over the past two years the company sold Vodafone Spain for €4.1 billion and exited Italy, merged its UK arm with Three to create the country's largest mobile network, and pointed the cash at two things: debt and its own shares. Net debt has come down from the mid-thirty-billions, the second €2 billion buyback finished in May 2026, and the share count has fallen about 3 percent a year over the last four years. A telecom retiring stock while it shrinks its footprint is making a specific bet: that a simpler, less sprawling Vodafone turns more of its revenue into free cash than the old one did.
Underneath, the operating trend has turned less hostile. Group service revenue grew 5.4 percent on an organic basis in fiscal 2026, helped by strong growth in Africa, up 12.9 percent, and by Germany clawing back from a year of decline to 1.3 percent growth in the fourth quarter. Germany matters more than any other market here, so its return to growth, even a slight one, removes the single biggest drag of the past two years. Adjusted EBITDAaL rose to about €11.4 billion, at the upper end of guidance, and free cash flow rose with it. The company guided the next year higher still, to €11.9 to €12.2 billion of adjusted EBITDAaL.
For a holder, the valuation is the quiet part of the bull case. At $15.74 (July 19, 2026) the stock is priced for stagnation, yet the assets underneath say more. Consider the book value the balance sheet carries, roughly $23.53 a share: the asset value methods build on it directly and come out on the high side, and the relative multiple methods sit above the current quote as well. The one group of methods that lands below is the set that discounts future dividend growth, and it lands low because the payout was rebased, not because the business is shrinking. The board has moved back to a progressive dividend, lifting it 2.5 percent in fiscal 2026, and VodafoneThree carries £700 million of annual cost and capital savings the company expects by fiscal 2030. If free cash flow grows as guided, a cash-generative telecom trading under its book with a covered, rising dividend does not need much to rerate.
Bear Case
The uncomfortable truth for a long-term holder is that Vodafone has been a value-destroying machine for the better part of a decade. Restructuring has followed restructuring, markets have been bought and sold, and the through-line is a share price that has gone nowhere and a dividend that was finally halved in 2024, the first cut of that size in years. Management sold Spain and Italy and called it right-sizing, but selling businesses to pay down debt is not the same as growing the ones you keep. The progressive dividend announced since is welcome, yet it starts from a base the company itself reset lower.
The clearest live example sits in Germany, the largest market. A law that took effect in July 2024 stopped housing associations from bundling cable television into tenants' rent, and it hit Vodafone squarely: the company lost close to 3 million of roughly 8.5 million bulk-contract television households, a base that had carried around €800 million of revenue, and German fixed-line service revenue fell nearly 6 percent. Germany took most of fiscal 2026 to stop bleeding, reaching bare growth only in the final quarter. A single regulatory change erasing years of growth in the core market is exactly the kind of exposure that makes a mature telecom's cash flows less dependable than the headline yield suggests.
None of this makes the stock expensive, and the bear case does not pretend it is. Backed out of the price, the market is asking for only about 0.8 percent a year of operating growth over five years, a low bar the value methods say the assets already cover. The problem is the balance sheet behind that low bar. Vodafone carries about $35 billion of net debt, close to nine times its normalized operating profit, and that operating profit covers the interest bill only about 1.8 times. Thin coverage on heavy debt is why a business trading under its book can stay there: the equity is a small slice on top of a large lender's claim, and any stumble in the German or European recovery reaches the shareholder before it touches the bondholder. The dividend has already been rebased once when the numbers demanded it. A holder buying the discount to book is betting the debt load and the regulatory drag do not force a second reset.
Valuation
What stands out about Vodafone's valuation is how little the price asks of the business. Backed out of the current price, the market is paying for only about 0.8 percent a year of operating growth over five years, and it treats today's depressed earnings as the cycle trough rather than the norm. Trailing operating profit is slightly negative, dragged down by impairments and the German reset, but on the company's through-cycle economics the normalized operating profit is solidly positive, many times the depressed trailing figure. In plain terms, the price is not betting on a turnaround so much as on the business simply not getting worse.
The methods that value the business mostly agree it is cheap, and only one family disagrees. The asset value methods, built on a book value near $23.53 a share, come out on the high side. The relative multiple methods, which read the business against the sector's cash-flow multiples, land above the price as well. The one family that sits below is the group that discounts future dividend growth, and it lands low for a mechanical reason: the payout was rebased in 2024 and near-term dividend growth reads as negative, so a method that rewards a growing dividend punishes the stock. Strip that effect out and the asset and earnings lenses say the price already has support. This is a value read, not a growth bet.
The balance sheet is where the discount earns its keep. Vodafone carries roughly $35 billion of net debt, close to nine times its normalized operating profit, and interest is covered only about 1.8 times, so the equity is a thin layer over a large creditor claim. The company does still generate cash, with adjusted free cash flow of €2.6 billion in fiscal 2026, and it holds roughly $7.7 billion of minority stakes in other businesses that sit outside the operating value as a further cushion under the downside. The bet at today's price is not a demanding one. It is that a cash-generative, deleveraging telecom stops destroying value, holds its rebased dividend, and lets the discount to book slowly close. The debt is what stands between that outcome and another disappointment.
Catalysts
Vodafone reported full-year results for fiscal 2026 on May 12, 2026. Total revenue was €40.5 billion and group service revenue €33.5 billion, with organic service revenue up 5.4 percent, led by Africa at 12.9 percent and a stabilizing Europe. Adjusted EBITDAaL came in around €11.4 billion and adjusted free cash flow at €2.6 billion, at the upper end of guidance, and the company guided fiscal 2027 adjusted EBITDAaL to €11.9 to €12.2 billion. The market reaction was muted, with the shares pressured on lingering concerns about the European core.
Two operational stories will drive the next several prints. In Germany, the largest market, service revenue returned to growth of 1.3 percent in the fourth quarter after a year held back by the cable-television law change, and whether that recovery holds is the single most important figure to watch. In the UK, the merger of Vodafone and Three completed on May 31, 2025, creating VodafoneThree with more than 28 million customers and £700 million of targeted annual savings by fiscal 2030; in May 2026 Vodafone agreed to buy out CK Hutchison's remaining stake for £4.3 billion, taking full ownership. Integrating that network and delivering the savings is the clearest self-help lever the company controls.
On capital returns, Vodafone completed the second €2 billion tranche of buybacks on May 11, 2026, and lifted the dividend 2.5 percent under the progressive policy it adopted in November 2025. The next scheduled update is the fiscal 2027 first-half report in the autumn, which will show whether German service revenue keeps growing and whether the VodafoneThree savings are landing on schedule. For a stock priced on stability rather than growth, those two data points matter more than the group headline.
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Vodafone disposals and FY26 results, 2024-2026 · Vodafone FY26 results, May 2026; German MDU coverage · Vodafone disposals, 2024-2025 · Vodafone FY26 results, May 2026 · Vodafone FY26 results, May 2026; VodafoneThree · Vodafone dividend rebasing, 2024 · German MDU law coverage, 2024-2025 · Vodafone FY26 results, May 12, 2026 · VodafoneThree merger and buyout, 2025-2026