Vodafone earnings preview

Monday, 15th May 2017 14:40 - by Rajan Dhall

Vodafone shares have been pretty bullish leading into their earnings release, volume is backing this move away from the most recent value area of just above 200p. Today Vodafone transferred its €2.3bn Safaricom stake to Vodacom and retained 5% in in Safaricom and this deal also brings Vodafone's shares in Vodacom up to 70%.  This led shares to rally early on in the session but they have now fallen to trade around the 210p mark. 

Be aware tomorrow as some analysts have been noting that the free cash flow (FCF) figure may come in lower than expectations (€4B) due to a high dividend policy from the Co. with this in mind some analysts note Vodafone is expected to report a 26% drop in earnings per share. The FTSE heavyweight is also set to confirm a write down of around €4.5bln due to issues in the very competitive Indian telecoms market. Underlying profits are also expected to be down but dividend payouts are expected to rise to €14.63 vs previous €11.45.

Going into earnings tomorrow, I have outlined the key support and resistance levels on the chart below. If news is good then price could reach to test the 217p resistance area and on the downside the 200p psychological area may play a pivotal role. Just keep an eye on the total amount of the write-downs and FCF these will give us clues to where price may settle.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.