Always entertaining to see how valuations react to news, in this case its Vodafone.
After a year of seismic change, the shares have held up well albeit moving in a large range.
However, the last few months has seen some momentum a midst positive comments from analysts about the company's chances of returning to organic growth.
In its results announcement today the company has, in fact reported that the fourth quarter saw its service revenues return to organic growth, albeit by a figure of 0.1%, a figure thats we're also being told actually beat consensus forecasts! (sharecast.com: Vodafone returns to organic growth as data demand soars).
And yet, even in a market showing positive for the day, the share price has actually fallen, by an amount that seems greater than the normal day to day movements in Vodafone.
FTSE 100 @ 6999.60, +30.73 (+0.44%)
Vodafone @ 227.1p, -7p (-2.99%), as at 9:24 am
So that's a 3% move against market sentiment, and running in the opposite direction to results beating consensus!
The company announced a dividend of 7.62p (+2%), but doesn't go ex dividend until 7th June, and appear to have made a strategic statement to grow it.
There's cash on the balance sheet, and capex spending (and inversely debt and cashflow), appears to be in line with previous communications including Project Spring.
From a different view, I would agree that the valuation seems high when based on measures such as p/e which suggests that it has been supported by the prospect of a 5% dividend and the potential recovery in its main markets, and the investment in Project Spring.
So that being the case, that its currently supported by its dividend, European recovery, and Project Spring, it seems to me that today's results, and confirmation of progress, should have been better received than with a fall against the market?
Always interesting, and entertaining then but, in the short term at least, rarely logical or understandeable.
As ever, it continues to confirm (for me at least), the need to take a longer term view than the day to day industry that surrounds the financial markets.
Related article links:
- sharecast.com: Vodafone returns to organic growth as data demand soars
- www.vodafone.com: For Investors
- www.vodafone.com: Vodafone announces results for the year ended 31 March 2015
- www.vodafone.com: Preliminary results For the year ended 31 March 2015
Earlier posts:
- Vodafone: "Deal or no deal" on Verizon Wireless!
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