[Updated 12/28/2021] Volkswagen Update
Volkswagen’s stock (OTCMKTS: VWAGY) at its current price of $30 has a potential upside of 30% as per Trefis’ Volkswagen’s valuation. The stock is about 10% lower post Q3 2021 results. For Q3 2021, vehicle sales (units) fell by 30% y-o-y to 1.8 million vehicles as the automobile sector continues to struggle with the shortage of semiconductor chips. For the quarter, the company recorded revenue at $67 billion, down by 4.3% y-o-y (down 4.1% in Euro). The earnings were recorded at $6.48, higher than the $6.07 per share in the same period of the previous year. We expect overall revenue and earnings to improve for 2021 as the semiconductor chip supply improves in the fourth quarter.
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Overall, we expect Volkswagen’s revenue to rise by 10% to €245 billion ($296.5 billion). Further, its net income is likely to rise to €12.8 billion ($15.4 billion), increasing the EPS figure to €2.54 ($3.08) for 2021. For FY 2022, we expect revenues to reach €254 billion ($307.3 billion) and net income to increase to €13.8 billion ($16.7 billion). This will take the EPS figure to €2.75 ($3.33), which coupled with the P/E multiple of 12.1x and a euro to dollar exchange rate of $1.21 will lead to Volkswagen’s valuation around $40, implying an upside of more than 30%.
Below you’ll find our previous coverage of Volkswagen stock where you can track our view over time.
[Updated 09/21/2021] Volkswagen’s Stock To Rise As Focus On Electric Continues?
Volkswagen’s stock (OTCMKTS: VWAGY) has been around the current range since July 2021 sans a small jump in mid-August. The stock fell in the last few days with the overall market and is currently priced near $30. In comparison Trefis’ Volkswagen’s valuation is $47. The company is continuing on the path of its e-campaign, where it plans that out of total sales volume more than 70 percent will be all-electric vehicles in European countries, and 50 percent in the Chinese and U.S. markets. In August end, Volkswagen announced its ID.3 model will be available from the fourth quarter in China – this is its third all-electric model in the last six months. The company also continues to focus on Research and Development of battery technology as they opened a State-of-the-art laboratory center for battery cells in Salzgitter, Germany. The aim is to roll out the Volkswagen unified cell off the production line in Salzgitter from 2025. The company is investing around €70 million in the facilities.
Overall, we expect Volkswagen’s revenue to rise by 10% to €245 billion ($296.5 billion). Further, its net income is likely to rise to €12.8 billion ($15.4 billion), increasing the EPS figure to €2.54 ($3.08) for 2021. For FY 2022, we expect revenues to reach €254 billion ($307.3 billion) and net income to increase to €13.8 billion ($16.7 billion). This will take the EPS figure to €2.75 ($3.33), which coupled with the P/E multiple of 14.1x and a euro to dollar exchange rate of $1.21 will lead to Volkswagen’s valuation around $47, implying an upside of more than 40%.
[Updated 2021/04/12] Does Volkswagen Stock Have Room To Grow At $35?
At the current price of around $35 per share, we believe Volkswagen’s stock (OTCMKTS: VWAGY) has reached its near term potential. VWAGY stock rose by 120% from $16 to $35 between 2018 end to now, compared to the S&P500 which has increased by 66% during the same period. The company saw a sudden boost in share price after its announcements in March of rivaling Tesla in the electric vehicles segment. The company announced that it plans to build six battery factories and sell more EVs than Tesla no later than 2025. This boost was slightly offset by the continuous rise of Covid-19 cases across the world. The company has seen revenue and earnings rise in 2019 but 2020 saw a dip due to the pandemic. Meanwhile, its P/E multiple has increased.
Volkswagen’s revenue fell from €235.8 billion ($268.8 billion) in 2018 to €222.9 billion ($271.2 billion) in 2020. Net income margin fell from 5% in 2018 to 3.7% in 2020. In the same period, on a per share basis, earnings went down from €2.36 ($2.69) per share to €1.66 ($2.02) per share .
During the same period, the P/E multiple rose from 5.8x to around 10.3x. The P/E improved further in 2021 after its EV announcements and is currently around 18.4x.
Where Is The Stock Headed?
The global spread of coronavirus led to lockdown in various cities across the globe, which affected industrial and economic activity. This, in turn, reduced consumer spending on big ticket items like automobiles. This was reflected in sales volume which plummeted by 16% to 9.16K units in 2020 from 10.96K units in 2019.
The actual recovery and its timing hinge on the broader containment of the coronavirus spread. Our dashboard Trends In U.S. Covid-19 Cases provides an overview of how the pandemic has been spreading in the U.S. and contrasts with trends in Brazil and Russia. Following the Fed stimulus — which set a floor on fear — the market has been willing to “look through” the current weak period and take a longer-term view. With investors focusing their attention on 2021 results, the valuations become important in finding value. Though market sentiment can be fickle, and evidence of an uptick in new cases could spook investors once again. In 2021 we expect VWAGY revenues to rise to €245 billion ($296.5 billion), up 10% y-o-y. Further, its net income is likely to rise to €12.8 billion ($15.5 billion), increasing its EPS figure to €2.54, which coupled with the P/E multiple of 12.2x and exchange rate of $1.21 to € will lead to Volkswagen’s valuation around $38 per share, which is about 8% above the current market price.
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|S&P 500 Return||1%||26%||-100%|
|Trefis MS Portfolio Return||2%||47%||297%|
 Month-to-date and year-to-date as of 12/28/2021
 Cumulative total returns since 2017