Is it time to get? From Aktienwelt360

Aktienwelt360 – The Volkswagen (ETR:)The stock (WKN: 766403) just can’t go down. For more than 10 years now, the stock has not been able to rise above the 100 euro mark. Every price rally was followed sooner or later by a big price slide. Just six months ago the price dropped below 100 euros again. The price decline was followed again by a recovery attempt, which has at least raised the share price to 125 euros (as of April 3, 2024).

However, the stock is valued almost cheaply relative to earnings per share. When profits are increasing, isn’t it time to get sustainable profits?

Earnings of 30 euros per share and expectations of more this year

In fact, the last financial year went very well for Volkswagen. Car sales increased by 10.4% and sales even increased by 15.4%. Profits also rose slightly. The net profit per share was an incredible 31.98 euros! So you are currently paying less than three times last year’s profit for the stock. It doesn’t get much cheaper than that.

The dividend was also slightly increased due to higher profits. This year you can expect a distribution of 9.06 euros per preferred share. The dividend yield alone is a remarkable 7.2%.

Investors in Volkswagen clearly see very dark clouds on the horizon. That low valuation is a clear sign that the stock market thinks that high profits will be the exception rather than the rule in the future.

In fact, the economic situation of a car manufacturer can change in a very short time. And that’s where the problem lies. Because Volkswagen has a number of areas of construction that need to be worked on to remain competitive in the future.

Because the competition is getting tougher. In the past year, many manufacturers have already reduced prices to compensate for the decrease in customer demand. Of course, this also reduces profits. Competitive pressure is increasing, especially in the huge Chinese market. Many Chinese car manufacturers now have a major role there and are increasingly expanding into Europe.

However, Volkswagen has published a relatively optimistic forecast. Accordingly, car shipments should increase slightly and sales should increase by 5%. The profit margin should also be kept constant at the current level. In general, this should also increase profits.

What? Could Volkswagen (ETR:) shares take off again?

But is that enough to boost the stock price?

At least this is a good situation. But a big problem still remains. Because profit is a deceptive figure. Since Volkswagen has a high investment requirement, a large part of the profits must be kept in the company’s own factories. In the last fiscal year, out of almost 18 billion euros in net profit, less than 11 billion euros ended up in the group’s accounts. Last year, out of almost 16 billion euros in net profit after all investments were paid, less than 5 billion euros remained.

And as the transition to electric vehicle manufacturing continues, the need for investment will increase even more. With increasing competitive pressure, the share price may have difficulty reaching the market in the coming years.

Article Volkswagen shares: time to get? first appeared Aktienwelt360.

Dennis Zeipert does not own any of the shares mentioned. Aktienwelt360 does not recommend any of the stocks mentioned.

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