Source: Abilitato.de
Sixt is an established quality company that is expanding in the US - a clear growth driver. And yet the Sixt share appears undervalued: Trading only slightly above its value equity, with a P/E ratio of 8 and a dividend yield of 6%. A rare opportunity?
Buy a premium company. Pay economy.
Operational development
Sixt is an excellently managed and positioned quality company.
Thanks to its premium strategy, which sets it apart from the competition, the Group is able to shield itself from tough competition, enabling it to generate a return on equity of 16%.
Sixt continues to have ample opportunities for expansion, which means that there are also above-average prospects for value growth in the future.
In 2024, the car rental company had to contend with an adverse industry environment - in addition to a difficult economic situation and higher interest rates, a significant drop in residual vehicle values had a particularly noticeable impact on profitability (lower profits).
The problem has now been solved, meaning that particularly high earnings growth could be achieved in the next three years (analyst consensus until 2027: 19% annual EPS growth).
Valuation assessment
Despite the good growth prospects, the structurally high profitability and the princely balance sheet, the Sixt share is trading at a very low valuation:
- Significant double-digit expected return (details in section Expected return depending on cost price)
- Cycle-adjusted P/E ratio of 8 (2025e)
- Share price quoted only slightly above the recoverable equity (2025e: EUR 49 per Sixt share)
- Dividend yield of over 6% (2026e)
Due to the cyclical business development, however, investors should also be prepared for increased price fluctuations and changing dividend payments in the future.
It is important to distinguish between temporary price movements and the risk of a permanent loss of capital (e.g. due to insolvency).
This risk appears to be very low, as Sixt is structurally profitable and has an extremely solid balance sheet that serves as a buffer.
Nevertheless, it is important to be sufficiently compensated for taking on the increased volatility - which is why the Sixt share should only be bought or increased if there is an attractive valuation.
The security is only suitable for investors who can deal with these fluctuations and even see an opportunity in them (from time to time there is an opportunity to top up at a reasonable price).
In principle, the Sixt share appears to be suitable for a buy-and-hold strategy, although in the past it has paid off to sell the shares again at a valuation of more than three times book value.
complete article:
