Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The high EPS includes proceeds from selling assets. They are one-off events so can be misleading when trying to judge the financial strength of a company. That is why FCF is also important.
FCF shows you what cash is being created or burned on an ongoing business basis.
VOD are projecting 3bn adjusted FCF 24, so when the adjustments that you do have to pay for are added back, FCF may be less than 1bn. From this they plan to pay over 2bn divs, so sell more assets or increase borrowing to cover.
You see the issue?
The signs are they would be foolish to raise the div.
It’s hard to predict SP moves but I do predict 1.40 is years off. It relies on rates falling to 1%, in the absense of a strategy and plans to grow earnings meaningfully. Selling assets and mergers that shrink market share do not grow earnings.
“ Do you know what , with the large amount of free cash coming into VOD I wouldn't be surprised if VOD increased it's divi next time to 6p.”
This statement needs correcting for the benefit of the easily led. From VOD’s own accounts, actual FCF is lower than the div payout.
This company has financial stress currently hidden by selling essential assets.
Define 'dead cert' please. It will be a first for the stock market if you have found one.
The bull thesis with VOD always seems to be, it's gone down so much it has to go up. You need to bang the spreadhseet to work out how it is going to grow real FCF substantially so you can discount the value back to see what big money is prepared to pay for it.
It is no dead cert that it can. If it can't, then you have to wait for interest rates to fall so the discount rate can be lowered.
Churn concern is back. Was the buzz thing to watch 5 years ago.
The RR thing does keep coming up here. I am afraid VOD don’t want someone coming along to tell the the buildings on fire and make swinging changes. The just want someone to keep paying a div. Currently achieved by selling assets.
Share trading you mean. Bad for your wealth.
Fidelity analysed its clients’ portfolios between 2003 and 2013 and found that the best-performing portfolios belonged to those who hadn’t touched their investments. Coincidentally, many of these thriving investors were already dead.
So, pick the right companies with a good chance of growing earnings next 5 to 10 years, invest and wait.
VOD still does not make it into my retirement fund though. I struggle to see the strategy for earnings growth with the plan to back it up.
'THIS IS THE WORST SHARE IN THE FTSE BY FAR'
Almost and depending on the timeframe.
SP only
1 year, Persimmon is the worst -40.25%, but VOD a solid second at -37.95%.
5 year, of consttituents that have been in for the 5 years, VOD is third from bottom, -59.39%. IAG takes the reverse gold at -63.01%
Great table from HL in link to play with. Some consolation for HL who did even worse than VOD last 5 years.
https://www.hl.co.uk/shares/stock-market-summary/ftse-100/performance?column=date_5y&order=desc
" '5 years -60%. FTSE -2%'
58% upside from here at least?"
So it will still be 37% down on the FTSE.
Maths is hard.
Oh the irony, eh Dan.
There are different ways to get to the figure. VOD are taking EDITDAal which has depreciation and ammortisation added back in (or not deducted), and then adding/deducting further movements from there to get the FCF.
Table Page 20 of the report.
https://investors.vodafone.com/sites/vodafone-ir/files/2023-05/Vodafone-FY23-Results-Announcement.pdf
'Mole - Vodafone Group annual free cash flow for 2023 was $12.395B (Dollars)'
Gary, I think you are looking at some American site that is compunding the shares for the ADR's. Divide that figure by 10 perhaps.
Page 3 of the company report,
Free cash flow was an inflow of €1.4 billion (FY22: inflow of €3.3 billion) partly reflecting a lower adjusted EBITDAaL,
higher licence and spectrum payments and tax phasing. Adjusted free cash flow was €4.8 billion (FY22: €5.4 billion).
Correction, actual FCF does not cover the div, from their own figures.
Real FCF was €1.4bn in 23, and the div was €2.4bn.
The figure they quote is adjusted FCF, where things like spectrum payment are added back in, but they still have to pay them. Look away look away.
The shortfall is currently being funded by selling off assets. There is no growth in the assets base, or even FCF here, hence the apparent low sp, which is actually a bit high. Unless they can prove a strategy for growth in future cash flows.
Sticking prices up is not it.
And where did you read the FCF is down? And where did you read about customer churn?
Adjusted free cash flow is projected €3.3bn. It was €4.8 in 2023, down from over 5. You can see the trend.
I did not say I read about churn. I am highlighting that raising prices is not a magic answer to more profits, so consider it in you valuation model. Stick your contract prices up 14% and the customer will be motivated to seek a better deal, and the better deals are out there so the consumer does have choice.
I think it important to consider both sides and I just post my reasons not to invest.
They are for my own benefit to work out if I was right to switch out in 2018, and still not buy back in. Am I missing a good opportunity now? I don’t think so.
Let good debate enrich us all.
Real revenue down. Impact of contract rises on customer churn yet to appear. Plan to dilute share of UK market, the one Europe area that is growing. Low real cash flow (the one not fiddled with).
A list of 5 depressing dinosaurs to avoid for the bright future.
Only the announcement of the mine location and plan to submit for approval will generate real excitement now.
Drill results will cause a day traders pop that will drift back toward zero if no real plan surfaces. The real investors who can permanently move this have CGNR’s number. 20 years of watching it have done that.
Rob I hope of the stocks you hung in there with, PSN was one of them. The penny is dropping for dumb experts. Inflation heading down. Rates will follow.
Pound strengthening. No 50 degrees and wildfires to deal with.
Damn it’s good to British.
Just signed up for 2 years fast fibre for £17 a month, no landline needed
If VOD try to raise prices, consumers hard up or otherwise can easily find better deals in this market. Churn will be massive if they blindly raise by 14%.