TomTom International B.V. : Do better options exist amongst the peer group?

TomTom International B.V. relative valuation is now OVERVALUED. It was previously rated UNDERVALUED, and has a fundamental analysis score of 39.

Our analysis is based on comparing TomTom International B.V. with the following peers – Hermes International SCA, Renault SA, Fiat Chrysler Automobiles N.V., Amer Sports Oyj Class A, ST Dupont SA, Le Tanneur & Cie SA, Powerland AG, Piquadro S.p.A, Parrot SA and Pace plc (RMS-FR, RNO-FR, FCA-IT, AMEAS-FI, DPT-FR, LTAN-FR, 1PL-DE, PQ-IT, PARRO-FR and PIC-GB).

Relative Valuation

TomTom International B.V.’s price of EUR 7.23 is greater than CapitalCube’s implied price of EUR 6.06. At this level, CapitalCube believes that TomTom International B.V. is overvalued. Over the last 52 week period, the stock has fluctuated between EUR 4.50 and EUR 7.89.

Relative Valuation

Company Overview

  • Relative outperformance over the last year is in contrast to the more recent underperformance.
  • TomTom International B.V.’s current Price/Book of 1.80 is about median in its peer group.
  • The market expects faster earnings growth from TOM2-NL than from its peers and also a turnaround in its current ROE.
  • TOM2-NL employs relatively high amounts of assets while generating relatively median profit margins.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • TOM2-NL‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s relatively high gross margin suggests some differentiation with pricing advantages versus peers.
  • While TOM2-NL‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median PE ratio and may be factoring in some sort of a strategic play.
  • The company’s capital investment program suggests it is under-investing in a business that is producing peer median returns.

Investment Outlook

TomTom International B.V. has a fundamental score of 39 and has a relative valuation of OVERVALUED.

TomTom International B.V. is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify TomTom International B.V. as ‘Speculative’. In other words, not only is TomTom International B.V.’s Fundamental Analysis Score low at 39, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 6.06.

Fundamentals Vs Relative Valuation

Drivers of Valuation

TOM2-NL has a Turnaround profile relative to its peers.

The market expects TOM2-NL to grow faster than the median of its chosen peers (PE of 71.72 compared to peer median of 38.69) and to improve its current ROE of 2.57% which is below its peer median of 5.31%. Thus, the market seems to expect a turnaround in TOM2-NL‘s current performance.

The company’s current Price/Book of 1.80 is about median in its peer group.

Valuation Drivers

TOM2-NL has maintained its Turnaround profile from the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

TomTom NV engages in the design, development, and sale of navigation and mapping products. It operates through the following segments: Consumer, Automotive, Licensing, and Business Solutions. The Consumer segment sells portable navigation devices, sports watches, maps, and related navigation products. The Automotive segment develops and sells navigation systems, services, and content to car manufacturers. The Licensing segment involves in licensing digital maps, traffic, and navigation content and services. The Business Solutions segment provides fleet management services and related solutions to fleet owners. The company was founded by Pieter Andreas Geelen, Harold Goddijn, Corinne Goddijn-Vigreux, and Peter-Frans Pauwels in 1991 and is headquartered in Amsterdam, Netherlands.

Disclaimer

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