first_img “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images Edward Sheldon, CFA | Wednesday, 1st July, 2020 | More on: VOD FY2018FY2019FY2020FY2021E See all posts by Edward Sheldon, CFA Dividends per share (€cents) Vodafone’s share price is down 12% in 2020. Here’s my view on the stock now Simply click below to discover how you can take advantage of this. Dividend coverage ratio0.770.580.620.79 Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address Our 6 ‘Best Buys Now’ Shares Adjusted earnings per share (€cents) I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. However, I do have some concerns over Vodafone’s dividend. For starters, earnings haven’t covered the dividend payout for the last three years. They’re not expected to cover the payout this year either. That’s a problem, to my mind, particularly when you consider the debt the company has on its balance sheet. Debt repayments always take priority over dividend payments.Secondly, Vodafone recently cut its dividend. That’s another issue for me. I tend to steer clear of companies that have recently cut their dividends. There’s always a chance they could cut the payout again. I prefer to invest in companies that have put together a solid dividend growth track record of at least five consecutive increases.ValuationFinally, turning to the valuation, Vodafone shares currently trade on a forward-looking P/E ratio of about 19.5. That looks high to me, considering the lack of revenue growth, high debt levels, and lack of dividend coverage.My view on Vodafone sharesWeighing everything up, I don’t see a lot of investment appeal in Vodafone shares right now. The company is struggling for growth, and I’ve concerns over the sustainability of the dividend. I think there are much better stocks to buy at the moment. The performance of Vodafone (LSE: VOD) shares has been disappointing recently. Year-to-date, Vodafone’s share price has fallen about 12%. Meanwhile, over the last three years, it’s fallen over 40%.Does the FTSE 100 telecommunications giant offer value now? Let’s take a look at the investment case.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Revenue growthOne of the first things I always look for when analysing a stock is revenue growth. Over the long term, revenue growth drives earnings growth. This, in turn, drives a company’s share price. Looking at Vodafone’s revenue growth, I can’t say I’m impressed. Over the last five years, revenue has fallen from €48,385m to €44,974m – a decline of 7%. Looking ahead, the consensus revenue estimates for FY2021 and FY2022 are €44,382m and €45,096m respectively. I’m not seeing enough top-line growth here to get excited about the stock.Balance sheet strengthIs the FTSE 100 company financially sound? Looking at Vodafone’s balance sheet, debt looks a little high, in my view. In its most recent full-year results, Vodafone reported non-current liabilities of €72,036m versus equity of €61,410m. Meanwhile, the group reported a net debt to adjusted EBITDA ratio of 2.8, which is also relatively high. I think this level of debt adds risk to the investment case.Dividend analysisOn the dividend front, Vodafone is still paying dividends, which is a plus. Many other FTSE 100 companies have suspended or cancelled their payouts this year, due to Covid-19 uncertainty. Recently, the company declared a final dividend of 4.5 eurocents for FY2020. That takes the full-year divi to 9 eurocents, equating to a bumper dividend yield of 6.5% at the current share price. That’s certainly attractive in today’s low-interest-rate environment. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.last_img