So I understand that the business of making cars isn’t a great one. Very capital intensive, low margins, tons of competition. But the valuations are ridiculously low, and I’m curious if someone has an explanation.
GM – 5.2x earnings
Volkswagen – 3.4x earnings
BMW – 4.54x earnings
Stellantis – 3.2x earnings
These are lower valuations than the forward multiple on Xerox, a company that’s obviously headed towards bankruptcy. A company that borrows money to pay its dividend. I can kinda understand the valuation for Stellantis as a lot of their brands are not doing well. But BMW and Volkswagen? Are they really doing this poorly? Keep in mind that VW owns Audi, Porsche, Lamborghini, etc.
15x earnings is a value stock in this market. 10x is deep value. 3x? I just don’t understand it.
Leave a Reply