The Vodafone (LSE:VOD) share price has been losing ground over the past few years. In the last five years, it’s down 51%. Even though the FTSE 100 veteran’s up a modest 4% in the last year, it feels more like treading water rather than an explosive recovery. Yet with some people calling this a bargain right now, I thought it worthwhile to take a closer look.

Spiralling down

Let’s run through some of the problems Vodafone’s endured that have pushed the share price down to current levels. One large issue’s been the amount of debt.

The business took on more debt during the pandemic, but has struggled to meaningfully pay it down. For example, the 2024 annual report showed net debt at €33.2bn, the same level it was a year ago. Given that the firm generated a profit before tax of €1.6bn, it would be good to use some retained earnings to pay down the debt. Yet even if it used all the profit from last year to do so, it still doesn’t make a huge dent into the debt pile.

Another issue that has hampered the stock is that Vodafone’s potentially too large and therefore inefficient. It has tried to solve this issue by recently exiting some markets, such as Italy and Spain. I see this as a good move for a more streamlined future. Yet in terms of understanding how the stock reached the current level, it’s definitely been a factor.

Indications of value

One sign the stock could be a bargain right now relates to the €500bn share buyback announced last week. Typically, it makes sense for a company to buy back the stock when the price is cheap. After all, buying when the share price is at all-time highs would be a costly way to use company funds. So although it’s not a concrete reason, the fact that Vodafone are launching a large buyback as a way of distributing funds back to shareholders right now is quite telling.

I feel the stock looks undervalued when I consider the benefits in coming years of what a more streamlined firm could look like. In selling off assets from low growth areas, it not only banks cash but can then focus more attention on markets where growth’s high.

We’ve already seen this with the €5bn sale late last year of the Spanish operations. With the latest quarterly results showing revenue in Turkey accelerating, pivoting from one area to another could be a great strategy move. Over time, group revenue should increase while costs shrink, helping to lift the share price.

One to watch

Although I feel there are more obvious bargains in the stock market right now, I do like the look of Vodafone shares at the moment. I’m seriously thinking about adding some to my portfolio.