Can Vodafone Keep Growing?

With shares of Vodafone (NASDAQ:VOD) trading around $38, is VOD an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Vodafone is a mobile communications company that provides a range of communication services and operates across the globe. The firm’s products and services cover voice messaging, data, fixed-line solutions, and devices to assist customers in meeting their total communications needs. Vodafone operates in three geographic regions: Europe, Africa, and Central Europe; Asia Pacific; and the Middle East.

British mobile company Vodafone said on Friday that its deal to sell its stake in U.S. operator Verizon Wireless (NYSE:VZ) completed, triggering a $23.9 billion cash return to shareholders. Shareholders of both Vodafone and Verizon Communications Inc. approved Verizon’s $130 billion takeover of the pair’s Verizon Wireless venture in January, paving the way for the third biggest deal in corporate history. Vodafone shareholders will be paid the equivalent of $0.49 for each existing ordinary share in addition to a distribution of Verizon shares, detailed earlier in February.

Vodafone said on Wednesday that in an illustrative example, based on share prices and exchange rates at the close of business on February 18, a Vodafone investor would receive proceeds of 72 pence in Verizon shares and 30 pence in cash for each share owned. Where shareholders are due to receive their cash in sterling or euro, the exact amount received will depend on exchange rates next week, the company said. The company said that a court approved the final elements of the deal, which included Vodafone’s related acquisition of the outstanding minority stake in Vodafone Italy.

T = Technicals on the Stock Chart Are Strong

Vodafone stock has been steadily rising over the past several years. The stock is currently trading near highs for the year and looks set to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Vodafone is trading above its rising key averages which signal neutral to bullish price action in the near-term.


(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Vodafone options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Vodafone options




What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

March Options



April Options



As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Vodafone’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Vodafone look like and more importantly, how did the markets like these numbers?

2013 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)





Revenue Growth (Y-O-Y)





Earnings Reaction





Vodafone has seen increasing earnings and mixed revenue figures over the last four quarters. From these numbers, the markets have been pleased with Vodafone’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Vodafone stock done relative to its peers, Verizon (NYSE:VZ), AT&T (NYSE:T), T-Mobile (NASDAQ:TMUS), and sector?






Year-to-Date Return






Vodafone has been a relative performance leader, year-to-date.


Vodafone provides telecommunications services and related products around the world. The company said on Friday that its deal to sell its stake in U.S. operator Verizon Wireless completed. The stock has been moving higher in recent years and is now trading near highs for the year. Over the last four quarters, earnings have been increasing while revenues have been mixed, which has generally pleased investors in the company. Relative to its peers and sector, Vodafone has been a year-to-date performance leader. Look for Vodafone to OUTPERFORM.

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