Imagine you could buy one of the world's largest car manufacturers - and on top of that you'd get a luxury company like Porsche and a commercial vehicle company like Traton for "free". Sounds too good to be true? That's exactly how Volkswagen ($VOW (+2.19%) ) is currently valued on the stock market. But why is that and what does it mean for investors? Let's analyze the facts! 💡
SWOT analysis: Where does VW stand?
Strengths 🌟
- Brand diversity: With Volkswagen, Audi, Porsche, Škoda and Lamborghini, VW covers almost all segments.
- Financial stability: Net liquidity in the Automotive Division of €34.4 billion offers security.
- Electromobility: Successful models such as the ID.7 and ID.Buzz demonstrate VW's progress in electromobility.
Weaknesses ⚡
- Dependence on China: Deliveries in this key market have slumped by 10%.
- High investment requirements: 13.6% of turnover is spent on research and development.
Opportunities 🌍
- Valuation: The share is currently trading so low that VW's core business is practically "free". 🚨
- Technology: Partnerships such as with QuantumScape could secure VW a long-term advantage.
Risks 🚧
- Competition: Tesla $TSLA (+2.01%) , BYD $BYD (-4.43%) and Chinese manufacturers are increasing the pressure - especially for electric cars.
- Regulation: CO₂ fleet targets could cause additional costs.
Volkswagen: a bargain? 📉
The current market capitalization of Volkswagen is 55 billion €. But how does this low valuation come about? A look at the subsidiaries reveals something astonishing:
Porsche AG ($P911 (-0.53%)):
- Market capitalization: 51 billion €
- VW holds 75 % of it, which represents a value of 38.25 billion € which amounts to
Traton SE ($8TRA (+1.05%)):
- Market capitalization: 15 billion €
- VW holds 90 %which corresponds to a value of 13.5 billion € means.
Together, this amounts to 51.75 billion 👉 Conclusion: Volkswagen's shareholdings alone are worth almost as much as the Group's entire market capitalization. This means that VW's core operating business - which generates billions in sales and profits every year - is virtually "free of charge" comes for free. 🚨
Dividend: Attractive, but not without risk 💰⚠️
Volkswagen entices with a dividend yield of 8.7% (€8.70 per share at a share price of €100) - a dream come true for dividend investors. However, this high payout also reflects the challenges: profits are declining and high investments in electromobility and restructuring could put pressure on the dividend in the future. Although liquidity remains robust at €34.4 billion, risks such as fines for CO2 fleet values or further cost burdens, e.g. due to the expensive restructuring measures at VW and Audi amounting to €2.2 billion, could make cuts necessary. Nevertheless, VW offers an attractive dividend overall, which is certainly interesting even in the event of cuts.
Graham valuation: What is VW really worth? 🧮
Benjamin Graham, Warren Buffett's mentor, developed a simple method for calculating the fair value of a company. His formula takes into account both earnings per share (EPS) and growth potential. Let's take a look at Volkswagen through this lens:
VW's earnings per share (EPS) are 24,3 €. To keep the valuation conservative, we assume a long-term moderate growth rate of 2 % i.e. only about the rate of inflation. Graham's formula is as follows: the value of a company is calculated by multiplying EPS by a base value of 8.5, to which a growth factor is added. Let's use the values: We multiply the 24.3 € profit with 8,5 + (2 × 2). This results in an estimated fair value of over 300 per share.
Even assuming 0 % growth the calculated value would still be 206 per share - well above the current share price of around € 100.
Of course, this is only an estimate and does not take into account all risks such as the challenges in the e-car market or the high investments. But even under conservative assumptions, the calculation shows that Volkswagen could be significantly undervalued. 🚀
Conclusion: Bargain or too many risks? 🚗⚠️
With a market capitalization of 55 billion € seems like a bargain - Porsche and Traton alone cover almost the entire value. But what about the risks?
- E-car battle: Tesla, BYD and Chinese manufacturers are making life difficult for VW - especially in China, where deliveries have fallen by 10%.
- High costs: Billions are flowing into electromobility and restructuring. Can profits and margins keep up?
- Regulatory hurdles: CO₂ targets and possible punitive tariffs could bring further burdens.
What do you think? Will VW master the transformation or are the risks too great? Let me know in the comments! 💬
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