- 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...
Following a loss of 3.76%, Bayerische Motoren Werke stock had a negative day on Friday. (Revised on September 23, 2022)
On the final day (Friday, September 23, 2022), the price of the Bayerische Motoren Werke shares decreased by -3.76%, from 74.17EUR to 71.38EUR. It has already dropped three times in a row. The stock changed by 4.40% during the most recent trading day, moving from a day low of 71.12 EUR to a day high of 74.25 EUR. The price is down -2.9% during the last 10 days and has dropped in 6 of those. Despite declining prices, volume rose by 851 thousand shares over the previous day. This could be a forewarning, and over the next few days, the risk will likely rise a little. A total of 2 million shares were purchased and sold for about 132.73 million euros.
In the short term, the stock is near the lower end of a broad horizontal trend, which often presents a solid buying opportunity. However, a collapse through the bottom trend line around 70.47 EUR will offer a strong sell signal, and a trend change may be anticipated. Given the current horizontal trend, there is a 90% chance that Bayerische Motoren Werke stock will conclude this three-month period trading between 69.58EUR and 79.46EUR. Stocks rarely manage to go straight from the bottom of a trend up to the top, and a break in a horizontal trend is frequently followed by a significant increase in volume. Therefore, potential runners are stocks that turn up in the middle of a horizontal trend.
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.
Value is everything.
In the current economic climate, there are many moving pieces for both BMW and Tesla, but given their high-end clients, large margins in comparison to competitors, and stable cash levels, I believe they are both designed to survive the crisis.
The only remaining question is how much investors should pay for the stocks, and in this area, I think BMW has a significant advantage. As you can see here, despite being significantly more profitable and bringing in more than four times as much revenue, BMW is only worth just more than a quarter of what Tesla is.
Over the next ten years, Tesla will undoubtedly surpass BMW in the auto industry, but I believe the price is too high, thus BMW prevails now.
What opportunities are there at Bayerische Motoren Werke?
My valuation model suggests that the stock is now valued properly. If you were to purchase Bayerische Motoren Werke today, you would do it for a price that is roughly 9.62% above its intrinsic worth. There isn’t much potential for the share price to increase above where it is presently trading if you think the stock is actually worth EUR69.33. Will there ever be another chance to purchase stocks at a discount? The share price of Bayerische Motoren Werke is fairly erratic, so there’s a risk it could fall (or rise) in the future, providing us another chance to buy. Its high beta, a reliable indicator of how much the stock moves in relation to the rest of the market, is the basis for this.
The billionaires are here.
It’s worthwhile to take some time to research the rich owners of BMW. BMW is still virtually entirely owned by Stefan Quandt and Suzanne Klatten, unlike other large corporations. Herbert Quandt, the father of the siblings, notably saved BMW from bankruptcy in 1959, left them his ownership interests in the company.
This indicates that just 50% of the company’s shares are in free float, or regularly traded publicly. Sometimes the amount a stock fluctuates depends on the free float. The lower free-float of BMW shares makes them potentially volatile.
The impact Quandt and Klatten have on the business is another consideration. Aside from their two board seats, the two have little formal authority over BMW, but it is well known that any significant choice made by BMW officials requires their unofficial blessing. The two have previously made some odd choices, such as a large wager on carbon fiber in 2013 that didn’t quite pan out, but in general, they are one of the reasons BMW is a little less eager to fully commit to electric vehicles.
BMW: A reliable dividend stock?
BMW distributes 21.6% of its earnings to its stockholders. Our indicator for the dividend’s dependability is 0.84 out of a possible 1.0. This suggests a historically dependable dividend payer. Additionally, experts anticipate a 287.89% growth in the dividend for the current fiscal year.
Are shares of BMW undervalued?
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.
Why has BMW stocked up?
Since the start of the year, BMW stock has increased by 22%. The background. While the Covid-19 outbreak devastated the auto industry in 2020 and caused a sharp decline in sales, BMW’s exposure to China—its largest and most lucrative market—aided the 105-year-old business in making a comeback.
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.
Which stock does BMW prefer?
BMW has a preferred share that trades at a roughly 15% discount to the regular share, which helps to increase the income on this investment. The preferred stock is listed on Bloomberg under the symbol BMW3:GR. The dividend yield now stands at 5.5%.
Is BMW having money problems?
The sanctions for conspiracy are seriously hampering BMW’s plans to dominate the luxury market.
In the past ten years, BMW hasn’t experienced a loss. Given the overall decline in auto sales, the automaker’s poor 2019 Q1 may not have come as a great surprise, but the decline in BMW’s trend line is far too severe to be explained by a slowing auto industry alone.
According to Bloomberg, BMW’s loss was mostly caused by having to set aside $1.6 billion as a legal provision to face fines from China and Europe as a result of the automaker’s alleged cooperation with rival German companies to postpone the introduction of new emissions equipment. But even if you disregard the substantial sum of money BMW had to set away, first-quarter earnings still decreased by 42%, or EUR1.1 billion ($1.23 billion).
The pricing competition BMW encountered in some regions and the expenditures it made in new technology during the first three months of 2019 are the causes of that decline. Although it’s unclear what those investments were used for, it’s understandable how cash resources may have been limited given the automaker’s commitment to collaborate with Daimler on autonomous technology and the influx of new models it recently released, including the X7, 8 Series, Z4, and upcoming 3 Series.
BMW unveiled a EUR12 billion ($13.4 billion) savings strategy that comprises reducing the number of models and speeding up the manufacture of new cars in order to return to profitability. But not all is hopeless, since the momentum BMW created through its investments may result in a surge of sales for the second half of 2019.
Nicolas Peter, chief financial officer at BMW, predicted that overall, the first half of the year will be “somewhat weaker.” Model changes that affect sales and drive up costs should be the cause of the anticipated loss in Q2 2019, but Peter stated that “We expect the second half-year to profit from the strong product momentum.”
Sales of the new 3 Series and the X7, the latter of which, according to BMW CEO Harald Krueger, is flying off dealer lots and above forecasts, will provide that impetus. If BMW can survive this difficult time, which could be made worse by escalating trade disputes between the US and China, it may be able to surpass Mercedes as the leading luxury automaker.