Market analysis
Invest Ideas

Volkswagen AG | The price is just fantastic

Current price – €113.9
Target price – €146.2
Growth potential – 28.4%🔥
Dividend yield – 7.92%💸
Investment time – 1 year

🚘Volkswagen AG is a German company, one of the world's largest automakers. It produces cars under the brands Volkswagen, Audi, SEAT, Skoda, Bentley, Bugatti, Lamborghini and others, and also owns a controlling stake in Porsche. The company's shares are traded on the Frankfurt Stock Exchange and are included in the DAX index calculation base. The fair value of Volkswagen AG shares is €146.2, which implies growth potential of 28.4%. Dividend yield in euros is 7.92%.

Investment theses

🔼Strong financial position.

Volkswagen's Q1 2024 financials were not outstanding. The company's revenue amounted to €75.5 billion, which is 1% lower than for the same period a year earlier. At the same time, operating profit fell by 20% y/y to €4.6. However, Volkswagen is confident in the future, expecting that by the end of 2024, revenue will grow in the range of 5-7%. This could be facilitated by the launch of new models by the company, which is planned for later this year. In addition, Volkswagen has launched a cost-cutting program, which has not yet had time to show its full potential, but may have an effect in the near future.

🔼Attractive valuation.

Volkswagen is valued extremely cheaply compared to its competitors. The P/S ratio, which is the ratio of the company's price to annual revenue, is at 0.17, compared to 0.35 for BMW and 0.45 for Mercedes-Benz.

🔼Dividends.

The company raised its dividend to €9 per ordinary share in 2024, which implies a dividend yield of 7.92%. This level in euros is quite high.
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