And The Giant Came Falling Down: Deteriorating Metrics For 5.8% Yielding Vodafone

Vodafone Group, a U.K.-based telecom giant with a presence in over 30 countries and serving over 400 million customers worldwide, recently announced its half-yearly results for 2012-13. It reported a net loss of 1.98 billion pounds compared to a profit of 6.68 billion pounds in the same period a year ago, largely due to the deterioration in its southern European operations. The said deterioration led the company to write down the value of its Spanish and Italian businesses by 5.9 billion pounds. The top line remained under pressure as well due to weaker spending in the region, with its service revenue dropping by approximately 1.5% in the second quarter, which also marks the first quarterly decline in 10 straight quarters.

Vodafone is trading at 10 times its forward earnings, a premium of 62% over the multiple of Telefonica (TEF), its Spanish rival. On a price to sales basis as well, VOD looks overvalued, trading at a premium of 150% and 250% over Telefonica and France Telecom (FTE), respectively. Find more