Netherlands-based Stellantis N.V. (STLA) is the fifth-largest automaker in the world. It is the company behind major automotive brands like Abarth, Alfa Romeo, Chrysler, Citroën, DS, Dodge, Fiat, Fiat Professional, Jeep, Maserati, Ram, Opel, Lancia, Vauxhall, and Peugeot.
STLA’s consolidated shipments rose 13% year-over-year in the third quarter to 1,281K units. Its total new vehicle inventory stood at 926K on September 30, 2022. Its global BEV sales increased 41% year-over-year to 68K units.
For fiscal 2022, the company expects a double-digit adjusted operating margin, and its industrial free cash flows are expected to be positive. On January 9, 2023, STLA and Element 25 Limited announced that they had signed a binding agreement to supply battery-grade, high-purity manganese sulphate monohydrate to STLA for use in electric vehicle battery packs.
STLA’s CEO Carlos Tavares said, “Our commitment to a carbon net zero future includes creation of a smart supply chain to ensure we meet our customers’ desire for EVs.” The agreement with Element 25 will help STLA secure a supply of raw materials for its battery electric vehicle (BEV) production.
In addition, STLA is backing the concept of flying cars for the future as it will invest up to $150 million over the next few years in electric flying vehicle company Archer Aviation.
STLA’s stock has gained 24.2% in price over the past three months and 23.9% over the past nine months to close the last trading session at $16.60. The stock was upgraded from Buy to Strong Buy in our proprietary POWR Ratings system on January 20.
Here’s what could influence STLA’s performance in the upcoming months:
Strategic Acquisition
On December 22, 2022, STLA announced that it had finalized the acquisition of the developer of advanced artificial intelligence and autonomous driving software, aiMotive. STLA’s Chief Software Officer, Yves Bonnefont, said, “The acquisition of aiMotive will accelerate our journey to become a sustainable mobility tech company and deliver our Dare Forward 2030 goals.”
Robust Financials
For the third quarter ended September 30, 2022, STLA’s net revenues increased 29.3% year-over-year to €42.10 billion ($46.17 billion).
STLA’s net revenues increased 21.2% year-over-year to €88 billion ($96.51 billion) for the six months ended June 30, 2022. Its adjusted operating income increased 46.6% from the prior-year period to €12.37 billion ($13.57 billion).
The company’s net profit from continuing operations attributable increased 37.2% year-over-year to €7.96 billion ($8.73 billion). In addition, its EPS came in at €2.47, representing an increase of 36.5% year-over-year.
Mixed Analyst Estimates
Analysts expect STLA’s EPS for fiscal 2022 and 2023 to decrease 0.7% and 23.3% year-over-year to $5.59 and $4.29, respectively. Its revenue for fiscal 2022 and 2023 is expected to increase 11.4% and 2% year-over-year to $191.46 billion and $195.29 billion.
Discounted Valuation
In terms of forward non-GAAP P/E, STLA's 2.88x is 80.9% lower than the 15.03x industry average. Its forward P/S of 0.26x is 73.7% lower than the 1x industry average. Also, the stock's 0.99x trailing-12-month EV/EBITDA is 90.3% lower than the 10.28x industry average.
High Profitability
In terms of trailing-12-month EBIT margin, STLA’s 11.68% is 47.8% higher than the industry average of 7.91%. Likewise, its 14.21% trailing-12-month EBITDA margin is 27.9% higher than the industry average of 11.11%. Furthermore, the stock’s 4.87% trailing-12-month Capex/Sales is 57.6% higher than the industry average of 3.09%.
POWR Ratings Show Promise
STLA has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. STLA has an A grade for Value, in sync with its discounted valuation.
STLA is ranked #8 out of 62 stocks in the Auto & Vehicle Manufacturers industry. Click here to access STLA’s Growth, Momentum, Stability, Sentiment, and Quality ratings.
Bottom Line
STLA’s stock is trading above its 50-day and 200-day moving averages of $15.04 and $13.92, respectively, indicating an uptrend. The company has guided for a strong end to fiscal 2022. With the fast adoption of electric vehicles, its strategic investments and agreements are expected to help it gain market share.
Given its robust financials, discounted valuation, and high profitability, it could be wise to buy the stock now.
How Does Stellantis N.V. (STLA) Stack up Against Its Peers?
STLA has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Auto & Vehicle Manufacturers industry with an A (Strong Buy) rating: Volkswagen AG (VWAGY), Bayerische Motoren Werke Aktiengesellschaft (BMWYY), and Suzuki Motor Corporation (SZKMY).
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STLA shares were trading at $16.48 per share on Friday morning, down $0.12 (-0.72%). Year-to-date, STLA has gained 16.06%, versus a 8.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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