Sunday, June 11, 2017

Analysis of VW 2017

Logo of VW 2017

Company: Volkswagen 

ISIN DE0007664039 | WKN 766403 

Business: A German automobile manufacturer. The are still producing motorcycles, cars, trucks, large-bore diesel engines, turbochargers, turbo machinery, compressors and chemical reactors. They are however most famous for their cars and here are the Volkswagen brands. The next time you go for a spinn with your Ducati remember it is a Volkswagen you are sitting on and never forget that the many will always beat the few in the end... one way or the other. 

Active: World wide with sales in 153 countries. 

P/E: 13.4

Here you can find the previous analysis of VW 2016

Contrarian analysis of VW 2017

The P/E for Volkswagen is pretty good with 13.4 and the P/B is excellent with 0.8 which gives a very clear buy signal from Graham. The earnings to sales are not very impressive with 2% and neither is the ROE with 5.6%. The book to debt ratio is also on the low side with 0.3.
In the last five years they have shown a yearly revenue growth rate of 2.4% which is ok but also not much more which then gives us a motivated P/E of 10 to 14 which means that VW is today fairly valued by the market.
They pay out a silly dividend in the size of 1.5% which correspond to only 20% of their earnings so hopefully they will be able to keep this level unless there are any more unpleasant surprises around the corner.

Conclusion: Graham says yes and so do I. The P/E and P/B is great and they should be able to increase their earnings which will bring up the other values. The only reservation that I have is how many more costs will arrive due to the Diesel gate. USA tends to be very fast and EU is acting more slowly but they tend to get there in the end. I will remain as a shareholder but I will not buy more.


John Magic said...

Oh and what about BMW with P/E around 8?

Fredrik von Oberhausen said...

BMW at 8 looks very good and I would not mind owning it but for me, at this moment, owning two automotive companies are more than enough.