Volkswagen Stock To Continue Recovery Post Earnings?

Volkswagen (OTCMKTS: VWAGY) is scheduled to report its fiscal Q1 2021 results on Thursday, May 6. We expect VWAGY to beat the consensus estimates for revenues and earnings. In the past year, the automobile sector suffered due to the pandemic as countries across the world put in various restrictions including lockdowns in place. This resulted in a fall in sales volume particularly in the first half of 2020 for all automobile companies and Volkswagen was no exception. In the second half of 2020, due to pent up demand and ease in restrictions the demand was revived. We expect the same to drive the first-quarter FY2021 results, as well.

Our forecast indicates that Volkswagen’s valuation is $38 per share, which is 17% above the current market price of $32. Look at our interactive dashboard analysis on Volkswagen’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

Trefis estimates VWAGY’s fiscal Q1 2021 revenues to be around $74.1 billion, just above the $73.5 billion consensus estimate. VWAGY’s revenues of $271 billion (€223 billion) for the full year 2020 were below its 2019 figure, as the whole sector was affected due to the pandemic. VWAGY saw recovery in the second half of 2021 and we expect the momentum generated over the last couple of quarters to continue in the first quarter of FY2021. Overall, we expect revenue of around $296.5 billion (€245 billion) in FY2021. Our dashboard on Volkswagen’s revenues offers more details on the company’s segments.

(2) EPS likely to beat the consensus estimates

VWAGY’s Q1 2021 earnings per share (EPS) is expected to be $0.77 per Trefis analysis, above the consensus estimate of $0.71. The company’s net income margin fell in 2020 with the EPS figure falling from $2.96 in 2019 to $2.02 in 2020. The removal of lockdowns and steady growth in the rate of vaccination has contributed to a revival in demand across sectors. Altogether, the company is likely to report an EPS of around $3.08 (€2.54) in FY2021.

(3) Stock price estimate 17% above the current market price

Going by our Volkswagen’s valuation, with an EPS estimate of $3.08 and a P/E multiple of 12.2x in fiscal 2021, this translates into a price of $38, which is 17% above the current market price of $32.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

While Volkswagen may have moved, it is helpful to see how its peers stack up. Check out Tesla Peer Comparisons to see how Tesla compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

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