🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Valeo shares target raised on stable Q1 sales

EditorNatashya Angelica
Published 2024-04-26, 11:38 a/m

On Friday, CFRA adjusted its financial outlook for Valeo (EPA:VLOF) SA (FR:FP) (OTC: VLEEY (OTC:VLEEY)), increasing the 12-month price target to €12.00 from the previous €11.00, while the Hold rating remains unchanged. The revised target is based on a price-to-earnings (P/E) ratio of 8.9x for 2024, a figure that stands below the peer average forward P/E of 12.0x. The discount is attributed to Valeo's comparatively lower margins.

In the first quarter of 2024, Valeo reported sales of €5.4 billion, aligning with consensus estimates from S&P Capital IQ. The company experienced a like-for-like sales growth of 2%, primarily fueled by the original equipment segment, which saw a 1% like-for-like increase and constituted 84% of the total Q1 sales. Moreover, the traditional Powertrain activities witnessed an 8% like-for-like growth, propelled by increased production for European automakers.

Despite the positive performance in the first quarter, CFRA remains cautious about Valeo's future, reaffirming its guidance for 2024 but acknowledging the challenging conditions in the automotive industry. The firm notes that car parts manufacturers are grappling with a slowdown in auto production, resulting in excess capacity issues for suppliers.

Valeo's performance in specific sectors was mixed, with the traditional Powertrain activities showing significant growth, while high-voltage electrification for certain electric vehicle platforms, particularly in Europe, faced a downturn. This dynamic points to the varied demand across different segments of the automotive market.

The outlook for Valeo and similar companies in the automotive supply chain remains uncertain due to industry-wide difficulties. Suppliers are navigating through various challenges, including the impact of production slowdowns on capacity and profitability.

InvestingPro Insights

As we consider the financial outlook for Valeo SA (OTC: VLEEY), the PRONEWS24 promo code offers an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to in-depth analysis and more InvestingPro Tips.

Current data from InvestingPro shows a market capitalization of $3.01 billion and a P/E ratio of 12.73, which adjusts to a more favorable 10.17 when considering the last twelve months as of Q4 2023. This suggests a more attractive valuation compared to the CFRA's target P/E ratio of 8.9x for 2024.

InvestingPro Tips highlight Valeo's high shareholder yield and a consistent track record of raising dividends, with an increase for the past 4 consecutive years and maintained dividend payments for 14 consecutive years.

This points to a stable return for investors, despite the company's weak gross profit margins, which could be a factor in the discounted P/E ratio applied by CFRA. Analysts on InvestingPro also predict the company will be profitable this year, supported by a profitability streak over the last twelve months.

Revenue growth remains robust, with a 10.02% increase over the last twelve months as of Q4 2023, and a dividend yield as of the latest data stands at 2.56%. For investors looking to delve deeper into Valeo's financials and future prospects, there are 6 additional InvestingPro Tips available, which could provide further insights into the company's performance and industry standing.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.