Company: Stellantis (STLA)
Company Information:
Sector: Consumer Cyclical; Industry: Automotive Manufacturer
Year founded: Initial company of group was 1896
Headquarters: Netherlands
What do they do?: Global Automotive Manufacturer
Markets operated: Worldwide
How do they make money? Distributing and selling cars, service parts, accessories and service contracts
Products: Abarth, Alfa Romeo, Chrysler, Citroen, Dodge, DS, Fiat, Jeep, Lancia, opel, Peugeot, Ram, Vauxhall, Maserati. SUVs, passenger cars, trucks, LCV and CUV.
This is the result of Fiat Chrysler merging with Peugeot SA. This started in 2019 and was completed in 2021
Employees: 281,595 majority in Europe.
Properties:
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In US, Canada and Mexico: Jeep Ram, Dodge, Chrysler, Fiat and alfa romeo
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In Brazil and Argentina: Fiat, Jeep, Peugeot, Citroen
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In France, Italy, Spain, Germany, UK, Poland, Portugal, Russia, Serbia, and Slovakia: Peugeot, Citroen, opel/vauxhall, DS, Fiat.
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In Morocco and Turkey: Peugeot, Citroen, Opel, Fiat, and Jeep
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In China, India and Malaysia: Jeep, Peugeot, Citroen, Fiat, DS, and Alfa Romeo
What differentiates them from their competitors?
- Plans for all brands to be electric by 2025.
- Autonomous driving: working w/ bmw and waymo
- STLA Brain: new software architecture which allows quicker software updates.
Threats:
- Covid 19
- Unfilled semiconductor – loss of ~20% of its planned 2021 production of unfilled semiconductor orders
- Pricing competition
- Regulation
- Interest rates, fuel prices
- Automotive tailpipe emissions
Main competitors: Toyota, GM, Ford, Honda, Hyundai/kia, Nissan
CEO: Carlos Tavares; age 62. Joined PSA managing board on 1/1/2014.
Moats: brand names, patents
Market Share:
- North America: 11.1%, down from 12%
- South America 22.9% up from 16.6%
- Europe: 22.1%, down from 23.1%
- Middle east/Africa 11.9% up from 9%
Concern for dilution: no
Insiders: 26.01% ownership
Institutes: 52.63%
Multiple classes of stock? no
DEBT:
-Debt/Asset: 0.2; index 0.35; better than index
-Debt/Equity: 0.68
-Current ratio: 1.15; index 3.0; worse than index
-Cash Flow to debt: 0.58; index 0.15; better than index
-Interest Coverage: 47.97
-Shareholder Equity ratio: 0.29; more financing comes from debt
Growth:
-Book value: 1 year 16%, 5 year 4%, 10 year 11%; Average 7.86% w/ standard deviation 6.32%
-EPS: 1 year 237%, 5 year 15%, 10 year 20%; Average 75.95% w/ standard deviation of 92.94%
-Analysis forward 5 yr EPS: 20%
-FCF: 1 year 1364%, 3 year 60%, 5 year 38%, 10 year 50%; Average 377.87% w/ standard deviation of 569.19%
-Revenue: 1 year 72%, 5 year 6%, 10 year 6%; Average 23.96% w/ standard deviation of 28.05%
-Overall of 4 metrics: 1 year 422.27%, 5 year 15.83%, 10 year 21.65%
Profitability:
-Operating Margin: 14.2% increasing y/y; index 5.3. Better than index
-FCF/Sales: 5.71 increasing y/y.
-ROE: 25.4%; index 12.4%. Better than index
-ROIC: 23.2% increasing y/y; index 12.5%
Valuation:
-PEG: 0.146
-Acquirers multiple: 1.73
-EBIT/EV: 0.57
-FCF yield: 34.3%
-Payback Time: 2 years
-For DCF: since there was a recent jump in eps/bv/fcf/rev, i used a lower number that was more consistent with previous growth rates. I calculated a value using a higher growth rate (the 5 year analysis 20%) and a lower value from the lowest growth rate. This was to come up with a high and conservative intrinsic value.
DCF:
-High side: 102 w/ MOS 40% at 61.2, MOS 50% 51, and MOS 75% 25.5
-Low side: 43 w/ MOS 40% 25.8, MOS 50% 21.5 and MOS 75% 10.75
TLDR: STLA is a car company with good growth. This company is a result of merger fiat-chrysler with peugeot. It is highly undervalued with a current price ~16 and intrinsic value somewhere between 41-100 depending on the metric used. It is currently trading at a nice 50-60% haircut. There are several uncertainties with it: semiconductor shortage, ever looming covid, gas prices, regulatory bodies, global tensions. However, it has a large moat and has survived several global catastrophes, depressions/recessions and will continue to thrive.
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