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Continental AG CON

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Morningstar’s Analysis

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Economic Moat


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Continental Completes Vitesco Spin-Off; Stock Remains Undervalued

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

Narrow-moat-rated Continental has completed the spin-off of its powertrain segment, now known as Vitesco, trading under the ticker symbol VTSC. Continental’s remaining business segments include autonomous mobility and safety and vehicle networking and information in the automotive group as well as tires and ContiTech in the rubber group. The 4-star-rated shares of Continental remain attractively valued, trading at a 34% discount to our new EUR 143 fair value estimate.

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Company Profile

Business Description

Continental is a global auto supplier and tiremaker. Operating segments include the autonomous mobility and safety segment and the vehicle networking and information segment in the automotive group, plus tires and ContiTech, which uses rubber in industrial and automotive components and systems, in the rubber group. Last year, pro forma for the spin-off of the powertrain segment, automotive group revenue was around 50% of the total with AM&S and VN&I each accounting for about 25%. Rubber group revenue, also at around 50% of the total, includes tires at about 32% and CT at around 18%. The company's top five customers are Daimler, Stellantis, Ford, the Renault-Nissan-Mitsubishi alliance, and Volkswagen, representing about 37% of total revenue (as reported, before the Vitesco spin-off).

Vahrenwalder Strasse 9
Hanover, 30165, Germany
T +49 51193801
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 233,365