Although the Stuttgart carmaker is presenting good figures, the stock market is not moving. How do analysts explain the situation?
The numbers are correct, but the reward is missing. Although Mercedes-Benz has raised its profit forecast for 2022 to “significantly above last year” after a third quarter, which was again very profitable, the stock has not risen. Mercedes boss Ola Källenius has received a lot of cards from investors in recent years: The luxury and electric strategy, strict cost discipline, high earnings and the transformation of the truck division matched their wishes. However, the stock market did not thank him – at least until now.
At just under 60 euros, the price has fallen by a good 14 percent since the beginning of the year. The stock’s price-to-earnings-per-share ratio is currently 4.6 – a comparatively low number that Källenius believes is not relevant to the company’s net worth. He is backed by many stock market analysts, many of whom rate the stock as a buy recommendation.
LBBW analyst: Mercedes is doing better than the market as a whole
Frank Biller, Senior Investment Analyst specializing in the automotive industry at LBBW, is one of them. “The development of Mercedes-Benz continues to be positive. The stock is doing better than the market in general,” says Biller. The German stock market index Dax has fallen by almost 18 percent since the beginning of the year, “Mercedes shares are around four percentage points the best in comparison,” says Biller.
In its latest analysis, LBBW raised the price target from EUR 85 to EUR 89. “Mercedes is at the forefront in terms of profitability and profitability. The strategy is paying off: The luxury segment is growing faster than the mass market, ” says Biller, pointing to another key figure: “According to our forecast, this year’s dividend in the Cars and Vans business alone could be higher than in 2021. , when the truck division was also included.” In 2021, Daimler had paid five euros per share, a historic record for the company.
Can higher prices be pushed?
According to Jürgen Pieper, automotive analyst at Bankhaus Metzler, the general situation in the markets is the main reason why Mercedes course is not following good business figures. His conclusion in two sentences: “General skepticism about industrial companies, dependence on raw materials, energy consumption, fear of economic slowdown, recently also reservations about China. As a result, there is no real performance.” Looking ahead to next year, Frank Biller sees “the challenge for Mercedes as maintaining high prices and preventing discounts – even when the supply problems are reduced and more can be produced”. For Deutsche Bank, this was the reason to reduce the price target from 105 to 100 – even if Mercedes CFO Harald Wilhelm has already announced that he would prefer to reduce production if in doubt.
While sports car maker Porsche has enjoyed a healthy 20 percent price increase since its semi-IPO in late September, Mercedes’ stock market remains an endurance game despite modest gains in recent weeks. “Change is a marathon, we are still in the first five to ten kilometers,” said Källenius recently. If you can prove the success of your own strategy step by step in the coming years, he is sure that the value on the stock market will also increase. A signal for this should be given at the beginning of next year: Mercedes wants to present the development of the car program in California.
At the same time, the distance of the electric pioneer Tesla is decreasing, whose highest market capitalization for a long time has brought tears to the board members of established corporations. Tesla stock is down nearly 35 percent since the start of the year. However, this has less to do with the underlying business than with Tesla boss Elon Musk. The man shorted the stock so much, he needed money to buy Twitter.