30 Nov

Comparing Automakers’ Valuation This Month

WRITTEN BY Jitendra Parashar

The auto sector

Valuation multiples are widely used by investors to compare companies that are similar in size or business type in capital-intensive industries such as the automobile (IYK) sector. Let’s compare the valuation of mainstream auto companies Ford (F), Toyota (TM), General Motors (GM), and Fiat Chrysler (FCAU) this month.

Comparing Automakers’ Valuation This Month

Comparing automakers’ valuation

As of November 28, Ford’s forward EV[1. enterprise value]-to-EBITDA multiple was 13.0x, much higher than that of home market competitor GM (8.4x) and Japanese peer Toyota (8.9x). These valuation multiples were calculated based on the automakers’ estimated earnings for the next 12 months. About four months ago, GM’s and TM’s EV-to-EBITDA multiples were lower, at 7.6x and 8.1x, respectively.

Among the auto giants we’re focusing on, Fiat Chrysler has the lowest EV-to-EBITDA and forward PE multiples, of 1.9x and 4.5x, respectively. The company’s higher leverage, which increases its risk, could be behind its low valuation. On November 28, Ford’s forward PE multiple was at 7.1x, higher than GM’s 6.1x but lower than Toyota’s 7.7x.

Market sell-off and tariff fears

In the first ten months of this year, US truck demand stayed strong, while total vehicle sales remained weak. In the fourth quarter so far, the broader market sell-off has pressurized auto stocks.

Also, steep auto tariffs could continue to hurt automakers’ profits and drive their earnings estimates and valuation lower, which is why auto investors should keep a close eye on the global trade situation in December. Continue to the next part, where we’ll look at auto part companies’ stock price movement this month.

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German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.

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