As I personal each shares, I’d wish to say that figuring out whether or not the Vodafone (LSE:VOD) or Lloyds (LSE:LLOY) share price affords the higher worth is much like deciding which of your youngsters you want finest. Sadly, their lacklustre share price efficiency means I’ve come to hate them each.

Okay, ‘hate’ may be just a little robust however I’ve turn out to be more and more pissed off with their long-term underperformance relative to, for instance, the FTSE 100.

Nevertheless, I’m going to try to determine which one I feel’s extra of a discount.

Asset-based valuation

Utilizing the price-to-book (PTB) ratio, the telecoms large seems to be the most cost effective. At 31 March, Vodafone had a PTB ratio of 0.36, in comparison with 0.73 for Lloyds.

This implies if the entire belongings on Vodafone’s stability sheet had been bought for his or her accounting worth — and the proceeds used to repay its liabilities — there can be 192p a share left over to return to shareholders.

Profitability

The place is reversed when earnings. For the 12 months ending 31 December (FY24), Lloyds is anticipated to file earnings per share (EPS) of 6.2p. This provides a present price-to-earnings (P/E) ratio of 9.35. For FY25 and FY26, the ahead earnings a number of is 7.73 and 6.37 respectively.

Analysts are forecasting Vodafone’s EPS to be 6.85p for the 12 months ending March 2025 (FY25). With a present share price of round 70p, this implies the present 12 months P/E ratio is 10.2.

EPS is anticipated to extend to eight.38 and 9.01p, in FY26 and FY27 respectively. This means a ahead P/E ratio vary of 8.35-7.77.

Dividends

With regards to dividend yield, there’s not a lot to decide on between the 2. Vodafone suffers from its latest 50% minimize. An anticipated payout of 4.5 euro cents (3.81p) implies a yield of 5.4%. Though nonetheless spectacular, it was in double digits a number of months in the past.

Lloyds is anticipated to return 3p a share in FY24 — 8.7% greater than it did in FY23. This provides the banking inventory a yield of 5.1%.

And the winner is …

Some of these valuation measures are supposed to facilitate the comparability of shares throughout sectors. Nevertheless, we’ve seen that Vodafone wins in terms of its stability sheet, Lloyds is forward utilizing earnings and each provide comparable dividend yields.

Nevertheless, if I had to decide on I’d choose Vodafone over Lloyds. The telecoms large’s presently restructuring its operations which, as soon as concluded, will see it emerge as a extra streamlined group.

I feel it’ll take some time earlier than it grows once more but it surely’s extra of a global enterprise. This implies it’s much less reliant on one market.

Though a turnaround isn’t assured, I’m assured that its determination to promote its much less worthwhile divisions is an efficient one.

Against this, Lloyds is extra targeted on the UK economic system. Though the home economic system’s forecast to develop over the subsequent couple of years, a restoration is much from sure. The general public funds don’t seem like in fine condition which could prohibit development.

And its share price is simply round 3.5% beneath its 52-week low. I subsequently really feel that Vodafone shares presently provide higher worth.