Image source: Vodafone Group plc
Across a wide range of metrics, Vodafone‘s (LSE:VOD) share price seems to offer tremendous value right now. In fact, I’d even go so far as to say that — on paper at least — I think the telecoms giant may be one of the FTSE 100‘s greatest value shares.
Its price-to-earnings (P/E) ratio’s 10.8 times for the current financial year (to March 2026). To put that into perspective, its 10-year average multiple stands significantly higher at around 19 times.
Additionally, Vodafone’s multiple sits below the UK blue-chip average of 11.6 times. A recent dividend re-basement puts the dividend yield at 5.5%, below an average of 6.8% for the past decade. But that’s still around two percentage points above the Footsie average.
And finally, Vodafone shares also look cheap based on the company’s book value (total assets/total liabilities). This sits below the widely accepted value watermark of one, at 0.4.
However, the business continues to face challenges in key markets, which some may say is fairly reflected by its rock-bottom valuation. So is the FTSE firm really a bona fide bargain at today’s prices?
The bear case
The latest yearly financials this month (20 May) emphasised the scale of Vodafone’s enduring troubles in Germany, its single largest market. Even after investing vast amounts to reinvigorate sales, the business is still under the cosh after bundling TV services into multi-dwelling unit (MDU) rents was banned in 2024.
Organic service revenues in the Central European country sank 5%. Yet changes to bundling laws are only half the story — stripping this out, service revenues still fell 2% in the period, reflecting “a lower fixed line customer base and higher competitive intensity in the mobile market“.
The sale of core operations in Spain and Italy has helped substantially bring down Vodafone’s debt. But with troubles in Germany persisting, it’s raised questions too over how the business will generate growth.
The bull case
The good news is that May’s report also indicated strong performances elsewhere. Organic service revenues growth in the UK, Turkey, and the rest of Europe meant corresponding sales at group level were up 2%.
In Africa, organic sales leapt 11.3% year on year as trading impressed in Egypt and South Africa. Africa could remain lucrative looking ahead amid robust population growth and soaring personal wealth levels.
Meanwhile, at Vodafone Business — an area which the FTSE company has identified as a key money-spinner — organic service revenues increased 4%.
With the balance sheet in a better place, too (net debt dropped by a third last year, to €22.4bn), the company’s in a stronger position to invest in its operations across these territories.
So what’s the verdict?
OK, ‘greatest bargain’ can be quite subjective. But while it’s not without risk, I think Vodafone also has considerable long-term investment potential. And I don’t think this is shown in the cheapness of its shares.
Reflecting recent restructuring, earnings growth is tipped to accelerate from 5% in the last financial year to 10% during fiscal 2026. And it’s tipped to pick up further next year, to 13%.
I think Vodafone could be destined for sustained growth from this point onwards, as increasing digitalisation drives demand for its services so is worth considering.
