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Continental AG CON

Morningstar Rating
€62.36 −1.14 (1.80%)
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Company Report

Continental Earnings: Preliminary Revenue and Margin Fall Short

Narrow-moat Continental reported disappointing preliminary first-quarter key financial figures, sending shares down over 5% intraday. Consolidated revenue of EUR 9.8 billion and an adjusted EBIT margin of 2% fell short of company-compiled consensus at EUR 10 billion and 3.7%, respectively. Continental cited unfavorable mix, foreign-exchange headwinds, and continued labor inflation as contributors to the poor quarter. There was no redeeming element in the release, with the automotive, tires, and ContiTech sectors all missing estimates. Despite this, management reiterated full-year guidance. We continue to forecast 2024 revenue marginally below the midpoint and adjusted EBIT margin at the bottom end of guidance. We maintain our EUR 108 fair value estimate and view the shares as undervalued.

Price vs Fair Value

CON is trading at a 41% discount.
Price
€63.50
Fair Value
€956.00
Uncertainty
High
1-Star Price
€787.20
5-Star Price
€45.10
Economic Moat
Mmnmm
Capital Allocation
Jkyndjgqm

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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News

Trading Information

Previous Close Price
€63.50
Day Range
€61.9463.00
52-Week Range
€58.2078.40
Bid/Ask
€62.24 / €0.00
Market Cap
€12.47 Bil
Volume/Avg
605,797 / 417,353

Key Statistics

Price/Earnings (Normalized)
9.80
Price/Sales
0.31
Dividend Yield (Trailing)
2.36%
Dividend Yield (Forward)
3.46%
Total Yield
2.41%

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 Core
Total Number of Employees
202,763

Competitors

Valuation

Metric
CON
BWA
MGA
Price/Earnings (Normalized)
9.807.438.86
Price/Book Value
0.931.271.15
Price/Sales
0.310.530.32
Price/Cash Flow
3.935.054.68
Price/Earnings
CON
BWA
MGA

Financial Strength

Metric
CON
BWA
MGA
Quick Ratio
0.731.240.69
Current Ratio
1.201.651.06
Interest Coverage
4.6014.107.28
Quick Ratio
CON
BWA
MGA

Profitability

Metric
CON
BWA
MGA
Return on Assets (Normalized)
3.37%5.84%5.10%
Return on Equity (Normalized)
9.44%13.81%13.89%
Return on Invested Capital (Normalized)
6.91%8.58%9.21%
Return on Assets
CON
BWA
MGA
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