Vodafone Reports Q1 FY26 Trading Update
Why we think this is neutral
The Q1 FY26 trading update from Vodafone shows a mixed performance. While the company reported 4.9% organic growth in Adjusted EBITDAaL, indicating profit growth, the revenue growth of 3.9% is considered low. The company faces some headwinds, including the impact of the TV law change in Germany and continued commercial investments. However, the company has a healthy cash position, with a new share buyback programme and reiterated guidance for Adjusted free cash flow. The valuation appears reasonable, with the share price near the 52-week high, suggesting the news may be largely priced in.
Key Points
- 4.9% organic growth in Adjusted EBITDAaL
- 3.9% revenue growth, considered low
- Headwinds from TV law change in Germany and commercial investments
- New €2.0 billion share buyback programme
- Reiterated guidance for Adjusted free cash flow of €2.4-€2.6 billion
- Valuation appears reasonable with share price near 52-week high
Summary
Vodafone Group Plc reported its Q1 FY26 trading update, highlighting 4.9% organic growth in Adjusted EBITDAaL, indicating profit growth. However, the company faced some headwinds, including the impact of the TV law change in Germany and continued commercial investments, leading to low revenue growth of 3.9%. The company has a healthy cash position, with a new €2.0 billion share buyback programme and reiterated guidance for Adjusted free cash flow of €2.4-€2.6 billion. The valuation appears reasonable, with the share price near the 52-week high, suggesting the news may be largely priced in.