Assessing Vodafone (LSE:VOD)’s Valuation Following Its Recent Share Price Rebound

Vodafone Group (LSE:VOD) has quietly turned into one of the U.K. market’s stronger rebound stories, with the share price up about 7% this month and roughly 15% over the past 3 months.

See our latest analysis for Vodafone Group.

Zooming out, Vodafone’s recent 7.29% 1 month share price return and 40.21% year to date share price return suggest momentum is rebuilding, while a 52.41% one year total shareholder return points to investors re-rating the recovery story.

If Vodafone’s turnaround has caught your attention, it might be worth seeing what else is changing gears in telecoms and infrastructure, starting with aerospace and defense stocks.

With earnings recovering, a hefty intrinsic discount and a share price already nudging past analyst targets, the big question now is whether Vodafone still trades below its true value or if markets are already pricing in future growth.

Most Popular Narrative: 7.6% Overvalued

Vodafone’s most followed narrative puts fair value slightly below the £0.97 last close, framing the recent rally as running ahead of fundamentals.

The analysts have a consensus price target of £0.858 for Vodafone Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £1.36, and the most bearish reporting a price target of just £0.6.

Read the complete narrative.

Curious how a loss making telecom can still justify a richer future earnings multiple and higher margins ahead? Want to see the growth and buyback assumptions powering that fair value call? Dive in to unpack the forecasts behind this verdict.

Result: Fair Value of £0.90 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Vodafone’s weak execution in Germany and the complexity of large scale restructuring could derail margin expansion and undermine those upbeat growth assumptions.

Find out about the key risks to this Vodafone Group narrative.

Another View: Multiples Paint a Very Different Picture

While the narrative based on analyst targets flags Vodafone as modestly overvalued, our valuation using its price to sales ratio suggests the opposite. At 0.7x sales versus an industry average and fair ratio closer to 1.6x, the market is still pricing in a lot of execution risk and very little upside.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Vodafone Group Narrative

If you see the story differently or would rather back your own analysis, you can build a personalised view in just minutes: Do it your way.

A great starting point for your Vodafone Group research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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