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Is the Vodafone share price crash a buying opportunity?

first_imgThe Vodafone share price collapseThe preliminary results posted by the company were a mixed bag. And while they certainly weren’t terrible, it seems investors were expecting more. Looking at the top line of the income statement, total revenue fell by 2.6% to €43.8bn. Given that the rollout of 5G has only just started, a declining level of sales isn’t exactly a pleasant sight, especially from one of the biggest UK mobile network operators.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…But despite the sales slowdown, the operational efficiency of the firm improved. As a result of these boosted margins, total underlying profit increased by 24.3%, rising from €4.1bn to €5.1bn in the space of a year. Subsequently, Vodafone returned to profitability for the first time since 2018, albeit by a small margin.Unfortunately, while restored profitability is a welcome sight, full-year adjusted earnings missed analyst expectations, leading to last week’s collapse of the Vodafone share price.A buying opportunity?While investors may not have been impressed, the Vodafone management team did achieve results within the guidance range issued earlier in the financial year. And looking ahead, it continues to expect growth from both its domestic and international markets. As such, the firm has issued EBITDA guidance for FY22 to be anywhere between €15bn and €15.4bn. Comparing these figures to the €14.5bn recently achieved, this represents potential growth of up to 6%.That’s hardly an exciting level of profit expansion. But for an established blue-chip company with a 6% dividend yield, it’s not too bad, I fell. So the recent decline in the Vodafone share price could be a buying opportunity. But there remains a significant risk to this business that stops me from personally pulling the trigger.The growing pile of debtAs previously stated, Vodafone has struggled to generate profits for a few years. Therefore to keep the lights on, the firm has had to raise additional capital through both debt and equity. Share dilution can harm the stock price, but it doesn’t directly compromise the company’s solvency. Debt, on the other hand, does. And Vodafone has a lot of it.Even though the management team was able to reduce net debt last year, it still stands at just over €40bn. And with a pile that big, comes an enormous interest bill. This is particularly troublesome given that interest rates are expected to rise in the near future. To make matters worse, the firm has also been deferring its corporation tax. There’s now around €2bn of unpaid tax on the balance sheet that will eventually have to be paid.Combining these two factors, a 6% boost in earnings may not be enough to stay in the green. And should profitability once again fall, the Vodafone share price may do the same. Therefore I won’t be adding any shares to my portfolio today. Grab your free report – while it’s online. Looking for new share ideas?Grab this FREE report now.Inside, you discover one FTSE company with a runaway snowball of profits.From 2015-2019…Revenues increased 38.6%.Its net income went up 19.7 times!Since 2012, revenues from regular users have almost DOUBLEDThe opportunity here really is astounding.In fact, one of its own board members recently snapped up 25,000 shares using their own money… So why sit on the side lines a minute longer?You could have the full details on this company right now. Image source: Getty Images. 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. Simply click below to discover how you can take advantage of this. See all posts by Zaven Boyrazian Enter Your Email Address Zaven Boyrazian | Monday, 24th May, 2021 | More on: VOD center_img Instead, I’ve got my eye on this… Our 6 ‘Best Buys Now’ Shares Is the Vodafone share price crash a buying opportunity? The Vodafone (LSE:VOD) share price crashed last week by nearly 10% following the publication of its latest results. I think it’s fair to say that investors weren’t particularly impressed given the downward trajectory the stock has been on. But has the business performed as badly as its share price indicates? And if not, is this a buying opportunity for my portfolio? 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. Zaven Boyrazian does not own shares in Vodafone. 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. One FTSE “Snowball Stock” With Runaway Revenueslast_img read more

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