Vodafone Share Price Moves Green YTD – What To Expect From Earnings ?

Vodafone Group (LON: VOD) will report its full-year 2024 results on Tuesday, May 14, as the company continues to work on reshaping the business. 

In its half-year report, released in November 2023, the company said its “transformation is progressing,” and its focus on customers and simplifying the business is “beginning to bear fruit, although much more needs to be done.”

For FY24, the company projected adjusted EBITDAaL (Earnings Before Interest, Taxes, Depreciation, Amortization, and After Leases) to be broadly flat at around €13.3 billion. According to the company-compiled analyst consensus estimate, EBITDAaL is expected to come in at €11.02 billion.

As part of its plan for a more simplified business, Vodafone sold its Italy and Spain businesses to focus its operations in Europe on growing markets, where it holds strong positions.

Analysts at Barclays recently noted that Vodafone issued proforma financials following the planned disposal of Spain and Italy. From FY23 onwards, both assets will be treated as discontinued operations. 

As a result, the bank adjusted its forecasts and price target for the stock, which was lowered to 80p from 85p per share. Barclays maintained an Equal Weight rating on the stock.

The Vodafone share price has had a strong start to the day, up 0.75% so far, to push the stock into the green through 2024. Despite this, holders over the past 12 months have seen declines of more than 22% and will be watching closely the financial data for signs that could shift sentiment.

Some essential areas to watch out for in Tuesday's release include Vodafone's cost-cutting initiatives, divestment of underperforming business units, network investments, and growth in new services.

In addition, the key market of Germany and its performance there will also be an area to keep an eye on.  

Looking ahead to the release, BofA Securities analysts said in an April research note that Vodafone announced three major portfolio deals (the sale of its Spain and Italy businesses and proposed merger with Three) that significantly reshaped its earnings outlook. 

(The UK government conditionally approved the proposed merger between Vodafone's UK operation and Hutchison's Three UK last week)

BofA explained that due to the deals, the forecasts are “somewhat transitionary,” with only Spain expected to be excluded from the company's FY25 outlook, “while the new dividend and buyback policy reflects the ‘endgame'.”

“Thus, while we adjust for Spain to match reporting, we present our pro forma post-M&A model that illustrates the impact of all three deals, and an attractive valuation case emerges,” declared BofA, maintaining a Buy rating on the stock and lowering its Vodafone target to 113p from 120p.

Elsewhere, Bloomberg said Vodafone's rising business revenue, powered by robust cloud and Internet of Things demand, “should be a bright spot,” although they note that a slow turnaround in Germany held back overall growth.