Bayerische Motoren Werke AG – Value Analysis (XETRA:BMW3) : December 26, 2017

Capitalcube gives Bayerische Motoren Werke AG a score of 69.

Our analysis is based on comparing Bayerische Motoren Werke AG with the following peers – Volkswagen AG Pref, Daimler AG, AUDI AG, Porsche Automobil Holding SE Pref and Toyota Motor Corp. (VOW3-DE, DAI-DE, NSU-DE, PAH3-DE and TYT-GB).

Investment Outlook

Bayerische Motoren Werke AG has a fundamental score of 69 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (0.07) than its peer median (0.76).
  • We classify BMW3-DE as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • BMW3-DE has relatively high profit margins while operating with median asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • BMW3-DE‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While BMW3-DE‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company is likely overinvesting in a business with only median returns.
  • BMW3-DE might have enough interest coverage to take-on additional debt prudently.

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Leverage & Liquidity

BMW3-DE might have enough interest coverage to take-on additional debt.

  • While BMW3-DE‘s debt to enterprise ratio of 68.64% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 62.86%), it also enjoys a relatively high interest coverage level of 23.61x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • Of the 5 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include PAH3-DE.

BMW3-DE has maintained its Some Capacity profile from the recent year-end.

  • BMW3-DE‘s interest coverage is less than (but within one standard deviation of) its five-year average interest coverage of 27.77x.
  • The decrease in its interest coverage to 23.61x from 28.74x (in 2016) was also accompanied by a decrease in its peer median during this period to 27.39x from 32.43x.
  • BMW3-DE‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 69.40%.
  • Like the interest coverage trend, the decrease in its debt-EV (to 68.64% from 70.88%) was also accompanied by a decrease in its peer median during this period (to 62.86% from 63.56%).
  • Relative to peers, debt-EV fell 1.55 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Volkswagen AG Pref 84.26 1 4.47 16.44
Daimler AG 72.31 1.29 31.17 12.7
AUDI AG 4.2 1.63 47.63 873.03
Porsche Automobil Holding SE Pref 0 13.77 -2.17 166
Toyota Motor Corp. 57.08 1.05 64.06 17.3
Bayerische Motoren Werke AG Pref 68.64 1.05 23.61 4.09
Peer Median 62.86 1.17 27.39 16.87
Best In Class 4.2 13.77 64.06 873.03

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Company Profile

Bayerische Motoren Werke AG engages in the manufacture and sale of automobiles and motorcycles. It operates through the following segments: Automotive, Motorcycles and Financial Services. The Automotive segment develops, manufactures, assembles, and sells cars and off-road vehicles, under the following brands: BMW, MINI and Rolls-Royce, as well as spare parts and accessories. The Motorcycles segment develops, produces, assembles, and markets BMW and Husqvarna brand motorcycles, as well as spare parts and accessories. The Financial Services segment includes car leasing, fleet business, retail customer and dealer financing, customer deposit business, and insurance activities. The company was founded on March 6, 1916 and is headquartered in Munich, Germany.

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