What Is The Fair Value For Volkswagen’s Stock?
Trefis estimates the fair value of Volkswagen’s (OTCMKTS: VWAGY) stock to be $21, which is roughly 10% higher than the current market price. A German auto giant, Volkswagen develops vehicles and components for the group’s brands, which include Audi, Seat, Škoda, Porsche, Scania, and MAN besides its core Volkswagen brand of passenger cars as well as commercial vehicles.
In this note, we discuss our stock price valuation for Volkswagen. You can look at our interactive dashboard analysis for Volkswagen’s valuation for more details, and also modify our forecasts for the company’s key metrics to understand how changes impact the company’s stock price.
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#1. Estimating Volkswagen’s Revenues:
- Total revenue increased from $240.5 billion in 2016 to $268.8 billion in 2018 and is expected to have increased by 2.7% to $276 billion in 2019.
- A separate interactive dashboard analysis ‘Volkswagen’s Revenues – How Does Volkswagen Make Money?’, details our forecast for FY 2019.
#2. Deriving Volkswagen’s Net Income:
- Net Income rose from $5.9 billion in 2016 to $13.5 billion in 2018 due to an improvement in margins coupled with higher revenue.
- We expect the net income figure to increase further to around $16.3 billion in 2019 as improvement in Total Revenue and an increase in net income margin are expected to continue.
#3. Determining Volkswagen’s EPS:
- EPS rose from $2.37 in 2016 to $5.24 in 2017 but fell back to $2.69 in 2018, and we estimate it to be $3.25 in 2019.
- The rise in EPS for 2019 is expected due to better Net Income, with the shares outstanding remaining flat.
#4. Estimating Volkswagen’s Share Price:
Our Price Estimate of $21 for Volkswagen’s Stock is based on our Detailed Valuation Model for Volkswagen and implies a 6.6x P/E Multiple on expected 2019 EPS of $3.25. Our interactive dashboard captures how Volkswagen compares with its competitors Daimler and Ford in terms of Revenue and P/E multiple.
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