TLDR
- Vodafone Soars 6.4% After €2B Buyback News
- Share Buyback Lifts Vodafone Stock to $9.70
- Vodafone Rallies on Buyback, Faces German Setbacks
- Vodafone Cuts Dividend, Boosts Shares with Buyback
- Vodafone Eyes Stability After €1.48B Loss
Vodafone Group PLC stock gained 6.4% over five days, reaching $9.64 on May 19 before peaking above $9.70. Investor sentiment remained strong in pre-market trading as the company announced a €2 billion share repurchase program. The move comes amid efforts to improve shareholder returns despite reporting a significant annual pretax loss.
Share Buyback Plan Boosts Market Sentiment
Vodafone initiated a €2 billion share buyback to strengthen shareholder value and capital structure. This announcement lifted investor confidence and contributed to the recent stock surge. Analysts interpreted the buyback as a positive signal of long-term financial stability.
Besides the repurchase, Vodafone declared a dividend of 4.5 European cents per share, down from 9 cents last year. The company aims to maintain cash flow strength while balancing shareholder distributions. Market watchers noted the reduced dividend aligns with strategic adjustments for capital efficiency.
The stock recorded steady gains from below $9.10 on May 15 to above $9.70 on May 20. This rise coincided with strong demand and improved investor outlook. However, a minor pullback followed after the peak, reflecting natural market correction.
Annual Earnings Decline on Impairments
Vodafone posted a pretax loss of €1.48 billion for the fiscal year ending March 31. This came after booking €4.5 billion in impairment charges related to operations in Germany and Romania. A year earlier, the group recorded a profit of £1.62 billion.
Adjusted EBITDA after lease expenses dropped to €10.93 billion, slightly below consensus of €10.985 billion. The decline stemmed from reduced German contributions due to regulatory shifts in the television sector. This missed expectation reflects the company’s ongoing operational challenges in key markets.
Despite setbacks, group revenue increased to €37.45 billion from €36.72 billion, although it fell short of the projected €37.71 billion. Strong service revenue growth in Africa, Turkey, and other European markets helped offset currency headwinds. Consequently, the company forecasted flat earnings for the current year.
Service Revenue and Forecasts Show Resilience
Reported service revenue rose by 2.8% to €30.76 billion, indicating ongoing demand for Vodafone’s telecom services. The company experienced notable growth across Africa and Europe outside of Germany. This offset the slowdown in its largest European market.
Vodafone projected adjusted EBITDAaL between €11 billion and €11.3 billion for fiscal 2026. It also expects adjusted free cash flow between €2.6 billion and €2.8 billion. These forecasts suggest cautious but stable future earnings as the company restructures its German unit.
Analysts maintain a one-year stock price target of $10.82, indicating a 12.19% potential upside. GuruFocus projects a GF Value of $12.01, implying a 24.59% possible gain. The consensus rating remains at “Hold,” reflecting a wait-and-see stance among brokerage firms.
