- I’ve written on BMW several times in the past, and most recently, I recommended “HOLD” calls because I believed that BMW had significantly overvalued its stock.
- That has ended now. Things are better after a 20%+ fall from my previous essay, which was double the market’s decline.
- Over the next two years, the company is anticipated to post reasonably stable earnings, indicating possible growth for the company.
- I’m changing my long-term objective.
- Looking for additional suggestions for investments like this one? Purchase them just at iREIT on Alpha. Find out more A>>
Since I started posting on SA, I have written about the corporation BMW (OTCPK:BMWYY). The firm is a top-tier global automaker based in Germany and is among the best automakers worldwide. Here is the outcome of my recent articles when I felt the company was overvalued.
People firmly believe that EVs are some type of magical beans that instantly increase the value of cyclical automakers by 2–10 times that of traditional automakers. Simply said, this is false.
In This Article...
Almost going electric
The electrification plan of any automobile company you decide to invest in now is something you must take into consideration. Even to automakers, the shift to electric vehicles as the preferred form of transportation is becoming clear as more stringent environmental rules are implemented.
How is BMW performing in that regard? Well, at least not in the same manner that Volkswagen is all-in. BMW is instead adopting a more wait-and-see strategy in an effort to determine just how quickly the future will transition to electric vehicles. They have made a public announcement stating that by 2025, more than 25% of their vehicles will be electric. But use caution when using that term because BMW uses it to describe everything from hybrids to fully electric vehicles.
This tactic has benefits in that BMW won’t need to invest a ton of money right away updating its factories with cutting-edge machinery. Instead, they may adopt a hybrid strategy and produce both gasoline and electric vehicles on the same assembly line. However, if they move too slowly, they won’t be able to produce enough electric vehicles and would suffer financial loss while their facilities remain idle.
We determine whether investing in an older BMW is worthwhile.
Some vintage BMWs, such as the E46, are among the most well-known sports cars ever. But ought to you purchase one?
You don’t necessarily need the most advanced post-modern technologies in a brand-new car. Sometimes a car’s history makes it all the more desirable. Older automobiles give the impression of pure mechanical engineering behind the wheel, whereas many newer cars offer a wealth of frills and devices.
Even buying a car that is ten years old can be difficult and expensive to maintain, let alone buying a classic. When buying an ancient car, it is crucial to make sure the upkeep is manageable. Some well-known automakers have a track record for producing dependable cars.
BMW has been around for a while, and while some could claim that their more current models are less dependable than those of its competitors, we think it’s still worthwhile to spend the money on an older BMW model. And here is why.
Fundamental analysis: COVID-19 caused a decline in BMW sales.
German multinational corporation Bayerische Motoren Werke AG, usually referred to as BMW, makes cars and motorcycles. Because it outperforms its rivals, the company is drawing investors’ attention during this period of uncertainty on the financial markets.
Investors should keep in mind that BMW is a solid firm with a strong presence in the market while trading BMW stock. The majority of financial analysts anticipate that the price of BMW stock will increase significantly over the next several years, making it a potentially profitable investment decision.
The market capitalization of $49.58B and the total stockholders’ equity of $65.67B show that this stock is not expensive, and perhaps this is a good moment to buy BMW stock. The fact that this company has given its shareholders more than $8 billion in dividends over the last three years, and that this sum may become much higher in the future, is another important piece of information for prospective investors.
According to certain predictions, the car industry will only modestly expand over the next few years, but BMW will still be a big role. If you choose to purchase BMW shares, keep in mind that there are a number of drawbacks associated with this business.
According to a press statement from the European Automobile Manufacturers’ Association, car registrations in Europe fell by 5.7% in July and 18.9% in August. BMW’s second-quarter loss before interest and taxes was $780 million as opposed to the $2.57 billion in EBIT from the prior year (earnings before interest and taxes).
BMW CEO Oliver Zipse, though, expressed optimism that the company’s performance will likely improve in the second half of the fiscal year.
BMW sold 372,754 automobiles in Europe during the second quarter, a decline of 32%, while the first half of the year saw 121,318 units (a decrease of 29.5%) sold in the USA. China’s six-month sales only fell by 6.0% to 329,447 units over the past six months, thanks to second-quarter volume growth over the prior year.
The Covid-19 pandemic is mostly to blame, but after things have settled, the price of BMW stock will be much higher.
Financial Statement
For the time being, let’s concentrate on the cash on the balance sheet since that’s what will help the auto industry survive this crisis.
BMW has a lot more cash, as you can see below, but since its most recent earnings release, the business has also sold $220 million in German debt and has an 8 billion euro revolver available. It has the cash to get through a challenging 2020 and come out on the other side safely.
Additionally, Tesla raised its balance sheet in February by selling $2.3 billion worth of stock. Tesla may have enough cash to withstand the crisis even with the monetary expenses of shutdowns and reduced sales.
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Is BMW priced too low?
Are BMW Shares a Buy? The company’s core business is technological innovation, which has enabled them to manufacture amazing, expertly-engineered automobiles with potent engines for many years. It is significantly cheap at low $20s per share, making it probably the ideal moment to invest.
How is BMW performing?
BMW AG, a German automaker, reported on Thursday that its revenue and net profit both reached record highs in 2021 despite increasing investment on electric vehicle-related research and development.
BMW claimed its full-year net profit increased from just 3.86 billion euros in 2020 to 12.46 billion euros, or nearly $13.7 billion, in a sneak peek at the numbers it will reveal at its annual meeting the following week. Over the previous year, sales increased 12.4% to 111.24 billion euros, or around $122.4 billion.
Do BMWs cost a lot to maintain?
Yes, BMW servicing is more expensive than many other manufacturers, whether they are premium or not, once the warranty expires. Over a ten-year period, a BMW may cost $12,000 more to maintain than a Toyota and $5,000 more than a Mercedes-Benz.
Because it’s a German car with specialized parts and technology, maintaining a BMW is pricey. It’s not merely a car to get people from point A to point B; it was designed for driving aficionados. A $400 battery replacement, for instance, might be necessary because the mechanic must register the battery with the engine control module. If not, the battery risk of an early demise since the vehicle won’t “know” how to charge it.
Additionally, the Digital Motor Electronics (DME) system in cars connects countless sensors and controls. A BMW may require a sophisticated method for a simple repair on another vehicle, which increases labor expenses.
Yes, a 3-Series BMW requires pricey maintenance once the manufacturer or certified pre-owned warranty has expired. A used BMW 3-Series typically costs $1,000 to $1,700 per year in maintenance and repairs.
A BMW 328i oil change can cost between $149 and $174, according to RepairPal. Nevertheless, depending on your area and BMW model, you can pay more than that.
Are BMWs trustworthy?
Fortunately, ratings of BMW dependability from several organizations support that excellent reputation: Customer Reports Every BMW in the lineup received a score above average in the 2020 rankings. The i3 electric car and the X6 midsize SUV are BMW’s most reliable models, and the brand as a whole is ranked seventh.
Is a BMW or a Mercedes better?
BMW remains the overall champion when it comes to luxury performance, even if the Mercedes-Benz CLS-Class is one of the best-performing large luxury sedans on the road right now. Customers should choose a BMW automobile if they want performance and style in one convenient package.
Is BMW superior to Audi?
BMW’s vehicles, which are made to provide the “ultimate driving experience,” frequently outperform Audi in terms of handling. Because of their overall stronger suspension systems that promote a smooth, pleasant ride, Audi vehicles are significantly less agile than BMW vehicles. BMW typically ranks higher for dependability