What happened

Shares of European telecom Vodafone Group (NASDAQ:VOD) jumped by 13.5% last month, according to data provided by S&P Global Market Intelligence, after the company released financial results for the first half of fiscal 2018. Investors overlooked some of the bad news in the report and decided instead to focus their attention on the company's free cash flow jump.

So what

Vodafone's semiannual financial results (which are reported in euros) covered the six months ending Sept. 30, and during that time the company's revenue was 21.8 billion euros, which was down 5.5% from the company's H1 2017 sales of 23 billion euros. For reference, 1 euro is currently equal to $1.14.

Additionally, the telecom's management said that the company lost 7.8 billion euros in H1 2018 "primarily due to a loss on the disposal of Vodafone India (following the completion of the merger with Idea Cellular) and impairments." That loss is in stark contrast to the company's earnings of 1.2 billion euros in the first half of fiscal 2017.

A person sitting in front of a computer with stock graph overlayed on top of the image.

Image source: Getty Images.

The declining sales and earnings weren't great news, but investors likely were more focused on the company's rising free cash flow. Vodafone's free cash flow popped 36.4% to 566 million euros, up from 415 million euros in the first half of 2017.

Speaking about the company's long-term strategy, Vodafone CEO Nick Read said on the analyst earnings call that "all of this gives us confidence -- reiterating confidence in the three-year cumulative free cash flow that we set back in May of 17 billion euros. We remain on track on that plan and, therefore, underpinning our dividend and improving shareholder returns."

Now what

Unfortunately, Vodafone's gains haven't continued into December; the company's share price has slipped about 3% since the beginning of this month. But the current slide may stem from investor fears about the U.S. economy and a possible trade war between the U.S. and China, rather than concerns about Vodafone's underlying business.

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