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Continental AG CON

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Stock XETR Rating as of
€62.88 +0.78 (1.26%)
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Company Report

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Continental Earnings: Weak Start to the Year, but Guidance Maintained

Matthew Donen

Narrow-moat Continental published results for first-quarter 2024 and hosted a call on May 8 following the disappointing preliminary headline financial figures released on April 17. Consolidated revenue of EUR 9.8 billion and adjusted EBIT margin of 2% fell short of company-compiled consensus at EUR 10 billion and 3.7%, respectively, and the share price fell after the announcement. Continental cited unfavorable mix, foreign-currency headwinds, and continued labor inflation as contributors to the poor quarter. There was no redeeming element in either release, with automotive, tire, and ContiTech businesses all missing estimates. Despite this, management reiterated full-year guidance.

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Price vs Fair Value

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CON is trading at a 814% premium.
Price
€62.10
Fair Value
€311.00
Uncertainty
High
1-Star Price
€356.90
5-Star Price
€92.80
Economic Moat
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Capital Allocation
Cwpgyqnv

Bulls Say, Bears Say

Bulls

Continental is well positioned to capitalize on auto industry trends like safety, electronics, connectivity, and automated driving. As a result, we expect the company's revenue to average growth in excess of average annual growth in global light vehicle production.

Bears

The cyclical, capital-intensive nature of the automotive industry can cause companies to experience substantial swings in profitability.

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Trading Information

Previous Close Price
€62.10
Day Range
€62.22–63.06
52-Week Range
€58.20–78.40
Bid/Ask
€62.86 / €62.90
Market Cap
€12.57 Bil
Volume/Avg
54,864 / 444,031

Key Statistics

Price/Earnings (Normalized)
13.53
Price/Sales
0.30
Dividend Yield (Trailing)
3.54%
Dividend Yield (Forward)
3.54%
Total Yield
3.55%

Company Profile

Continental is a global auto supplier and tiremaker. Operating segments include the automotive group (electrical architecture and networking, autonomous mobility, safety and motion, smart mobility, and user experience), tires, and ContiTech which uses rubber in industrial and automotive components and systems. Last year, automotive group revenue was around 49% of the total, tire was 34%, ContiTech was 16%, and contract manufacturing for Vitesco was 1%. The top five customers include Ford, Mercedes-Benz, the Renault-Nissan-Mitsubishi alliance, Stellantis, and Volkswagen, representing about 34% of total revenue. Europe, at 49% of total revenue, is the company's largest market, followed by North America at 27%, Asia (mostly China) at 21%, and 4% in other regions.
Sector
Consumer Cyclical
Industry
Auto Parts
Stock Style Box
Mid Value
Total Number of Employees
200,888
Website
https://www.continental.com

Competitors

Valuation

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Metric
CON
MGA
6902
Price/Earnings (Normalized)
 13.538.8627.95
Price/Book Value
 0.901.191.35
Price/Sales
 0.300.321.07
Price/Cash Flow
 4.484.6210.93
Price/Earnings
CON
MGA
6902

Financial Strength

Metric
CON
MGA
6902
Quick Ratio
 0.720.731.00
Current Ratio
 1.241.091.67
Interest Coverage
 3.375.6816.76
Quick Ratio
CON
MGA
6902

Profitability

Metric
CON
MGA
6902
Return on Assets (Normalized)
 2.21%4.85%4.25%
Return on Equity (Normalized)
 6.12%13.50%7.15%
Return on Invested Capital (Normalized)
 4.79%8.85%5.16%
Return on Assets
CON
MGA
6902
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