Down 54%, here’s one of my favourite FTSE 100 bargain shares for 2025!

The FTSE 100 remains packed with value shares despite its strong showing this year. Here’s one fallen angel I think demands serious attention.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing in FTSE 100 value shares provides an opportunity for share pickers to supercharge their long-term returns. The theory is that undervalued companies may rebound strongly as market perceptions improve, delivering spectacular capital gains in the process.

Vodafone Group (LSE:VOD) is one cheap-as-chips Footsie stock on my radar today. Its shares seem to offer exceptional value across a range of metrics, including predicted earnings and dividends, as well as the value of its assets.

While they’re not without risk, here’s why I think Vodafone shares are worth a close look from value investors.

Should you invest £1,000 in Prudential right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Prudential made the list?

See the 6 stocks

Earnings

First we’ll look at how the telecoms titan is valued using the price-to-earnings (P/E) ratio.

For this financial year (to March 2025), Vodafone has a P/E of 9.9 times. To put that in context, the FTSE 100 average sits on a higher 14.3 times.

But how does this compare with readings across the wider sector? As the table shows, Vodafone also scores fairly well on this metric versus other major industry players.

CompanyForward P/E ratio
Telefónica15.1 times
Orange9.7 times
Deutsche Telekom16.4 times
A&T10.5 times
Verizon Communications9.6 times
T-Mobile25.9 times

Dividends

Telecoms companies are famed for providing large dividends thanks to their stable, recurring revenues and high cash flows.

Earlier in 2024, Vodafone announced plans to rebase its dividends in order to cut debt. Yet despite this, the forward dividend yield, at 6.3%, still soars above the Footsie average of 3.6%.

Furthermore, the yield on Vodafone shares also beats the corresponding reading of most of its sector rivals.

CompanyForward dividend yield
Telefónica6.9%
Orange7.4%
Deutsche Telekom2.9%
A&T4.9%
Verizon Communications6%
T-Mobile1.2%

Assets

The final thing I’m considering is how cheap Vodafone shares are in relation to its book value. This is the value of the firm’s total assets minus total liabilities.

Today the price-to-book (P/B) multiple is around 0.4. This comfortably comes in below the value watermark of one.

Vodafone P/B ratio
Source: TradingView

Time to consider buying?

So all in all, Vodafone scores pretty well. But surely there must be a catch? After all, the firm’s share price is down 54% in the last five years, indicating potential internal and/or external problems.

Vodafone's share price
Source: TradingView

Arguably the biggest concern is the size of the company’s debt pile. Despite recent divestments, this remained at an eye-watering €31.8bn as of September.

This could significantly impact Vodafone’s growth plans and weigh on future dividends. Given how capital intensive its operations are, such high debts are especially worrying.

Yet on balance, I believe the potential benefits of owning Vodafone shares may outweigh the risks. It still faces problems in Germany following changes to service bundling laws. But sales are rising strongly in its other European territories, not to mention in Africa (where organic first-half revenues soared 9.7%).

Vodafone’s refocussed efforts on its Business division are also paying off, with organic service revenue growth speeding up to 4% in the six months to September.

With its scale and market-leading brand, I think Vodafone could be a great way for investors to capitalise on the growing digital economy over the long term. At current prices, I think it demands serious consideration.

Should you buy Prudential now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Vodafone Group Public. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Here’s the dividend forecast for Rolls-Royce shares as Trump rocks the markets

Rolls-Royce shares have joined in the volatility over the past week. However, with the direction being largely downwards, the dividend…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Dividend yields of up to 11%! Here are 3 UK passive income stocks to consider

Searching for ways to supercharge your passive income with UK dividend stocks? Here are three that have grabbed our writer's…

Read more »

Young Caucasian woman at the street withdrawing money at the ATM
Investing Articles

£10,000 invested in NatWest shares at the start of 2025 is now worth…

NatWest shares surged into 2025, but things have become a little more complicated in recent weeks. Dr James Fox explores.

Read more »

Investing For Beginners

Why the FTSE 250 could outperform the FTSE 100 for the rest of the year

Jon Smith explains why the FTSE 250 could do better than its big brother when factoring in domestic exposure and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Tariff fears send the Lloyds share price tumbling, but the dividend yield is climbing

Just when the Lloyds Banking Group share price had been rising steadily, along comes a global upheaval to knock it…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market crash could help an investor retire years early

A stock market crash can be alarming -- but for the well-prepared investor, it can also be an exceptional opportunity…

Read more »

Investing Articles

1 key fact to remember in this stock market correction

This writer takes a look at a FTSE 100 investment trust that is catching his eye after the recent massive…

Read more »

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »