Saturday, 19. August 2017  
09.04.2017 07:42
Author: Nic Wright

STOCK SCREEN: Intrinsic Value Estimates For Major Automobile Stocks In Three Cycle Scenarios

 

Autos have seen a small rally post the Brexit vote, although relative performance is still subdued. Autos’ relative valuations have de-rated very sharply, with PE relative, price/book, and price/sales all well below long-term averages. The market is clearly pricing in a sharp cycle downturn, but will Central Banks let this happen?

 

Here are three scenarios:

·         First, a full cyclical downturn happens soon despite central banks being expansive.

·         Second, the cycle is “stronger for longer” as central banks maintain control and Autos revenues flat-line with margins likely to come down gradually.

·         Third, central banks and governments start an additional stimulus package to accelerate world growth to a higher sustainable growth level. This could drive a sharp re-valuation of the autos secor from the current levels.

 

In looking for ideas this week, we screen the sector for stocks trading below historic EV/Sales multiple to acknowledge scenario 1 and with significant upside based on our AVM's fair value estimate to acknowledge scenario 2 and 3.

 

Here are the filter criteria:

1. Market capitalization above 1bn.

2. Current EV/SALES < Historic EV/SALES Low (Curr. EV/Sales / Hist. EV/Sales Low)

3. Upside to Intrinsic Value according to our Graham (scenario 2) and Greenblatt (scenario 3) AVM estimate.

 

Here is our list of stocks matching all criteria in alphabetical order. Company names in the table below are linked to the ANALYZER, our single stock analysis tool. Intrinsic Value Model assumptions can be adapted in the MODELER, our modeling and forecasting environment:

 

CLICK COMPANY NAME FOR DETAILED STOCK VALUE ANALYSIS

COUNTRY

LAST PRICE

MARKET CAP.

CURR / HIST. LOW EV/SALES [%]

MEAN MULTIPLE UPSIDE [%]

GRAHAM UPSIDE [%]

GREENBLATT UPSIDE [%]

 BAYERISCHE MOTOREN WERKE AG

 Germany

83,13

54005

94,5

231,6

94,1

170,5

 HYUNDAI MOBIS CO LTD

 South Korea

222000

21610338

75 

93,2

98,4

83,4

 KIA MOTORS CORPORATION

 South Korea

34750,00

14086376

50 

121,9

143,7

204,6

 MITSUBISHI MOTORS CORP

 Japan

637,00

949310

75 

98,6

19,9

81,4