BMW Earnings: Strong Fourth Quarter Overshadowed by Heightened Near-Term Investments

Narrow-moat BMW capped off fiscal 2023 with a strong fourth quarter, reporting year-over-year sales and automotive operating income growth of 8.7% and 8.2%, respectively. However, the stock slipped during intraday trading as management stated that fiscal 2024 would be a year of heightened investment, expecting peak capital expenditures with respect to electrical vehicle technology. Nonetheless, we remain confident in BMW’s product portfolio and believe the company should be able to generate high-single-digit margins despite the significant investment ramp. As such, we reiterate our EUR 163 fair value estimate.