Why auto stocks are valued so low despite record earnings

The BMW iX xDrive40 at the IAA in Munich

The manufacturer’s auto stocks are among the cheapest in the world.

(Photo: Reuters)

Dusseldorf Despite delivery bottlenecks and a shortage of semiconductors, car manufacturers around the world earn more than ever before. In addition, earnings estimates are rising as companies and analysts raise them. But share prices are falling on the stock exchanges: Hyundai (Korea) minus 14 percent in the past three months, BMW minus 15 and General Motors (USA) minus 18 percent.

This reduces the ratings. The world’s ten largest automakers in terms of sales are currently available for sale with a single-digit price-earnings ratio (P / E). This means that the companies and their shares are available for less than ten times the net profit that they are generating in the current financial year. BMW, Daimler and the Italo-French Stellantis group are the cheapest in the world with a P / E ratio of less than six.

That alone does not make the stocks interesting, because low valuations almost always result from legitimate risks. But five car manufacturers surprise with extreme values ​​that appear attractive even apart from the low valuation.

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