Headquartered in Hoofddorp, the Netherlands, Stellantis N.V. (STLA) designs, manufactures, distributes, and sells automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, and production systems globally.
Recently, STLA has grabbed the attention of hedge fund managers. For the quarter ended September 30, Jim Simons of Renaissance Technologies bought 4.87 million STLA shares, Israel Englander of Millennium Management bought 1.60 million, and Ken Griffin of Citadel Advisors bought 1.94 million.
For the same quarter, Ken Heebner of Capital Growth Management, Karthik Sharma of SRS Investment Management, and Joel Greenblatt of Gotham Asset Management bought new positions in STLA, buying 2.16 million, 4.62 million, and 28.78 thousand shares, respectively.
The stock has gained 9.6% over the past six months and 5% over the past three months to close its last trading session at $14.14. It is trading higher than its 50-day and 200-day moving average of $14.
Here are the factors that could influence STLA’s performance in the upcoming months:
Solid Financials
For the fiscal half-year that ended June 30, STLA’s net revenues increased 21.2% year-over-year to €88 billion ($93.13 billion). Operating income rose 40.5% from the prior-year period to €10.32 billion ($10.92 billion). Net profit and EPS came in at €7.96 billion ($8.42 billion) and €2.47, up 17.2% and 17.1% year-over-year, respectively.
Discounted Valuation
In terms of its forward P/E, STLA is trading at 2.52x, 82.1% lower than the industry average of 14.06x. Its forward EV/EBITDA multiple of 0.84 is 90.5% lower than the industry average of 8.84. In terms of forward EV/Sales, it is trading at 0.14x, 87.5% lower than the industry average of 1.09x.
Strong Profitability
STLA’s trailing-12-month net income margin and levered FCF margin of 9.33% and 5.99% are 82.3% and 373.9% higher than the industry averages of 5.12% and 1.26%, respectively. Its trailing-12-month ROCE, ROTC, and ROTA of 27.57%, 14%, and 8.44% are 113.3%, 112.5%, and 91% higher than their respective industry averages of 12.93%, 6.59%, and 4.42%.
Favorable Analyst Estimates
The consensus EPS estimate of $5.77 for the fiscal year 2022 indicates a 2.5% year-over-year improvement. Likewise, the consensus revenue estimate for the same year of $187.95 billion reflects an increase of 9.3% from the prior year.
Of the 12 Wall Street analysts rating the stock in the last three months, nine have rated it as Buy, while three have given it a Hold rating. The 12-month median price target of $22.73 indicates a 60.8% potential upside. The price targets range from a low of $16.96 and a high of $36.04.
POWR Ratings Reflect Promising Prospects
STLA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. STLA has a Value grade of A, in sync with its lower-than-industry valuation multiples. The stock has a B grade for Sentiment, consistent with its favorable analyst estimates.
In the 60-stock Auto & Vehicle Manufacturers industry, it is ranked #9.
Click here to see the additional POWR Ratings for STLA (Growth, Momentum, Stability, and Quality).
View all the top stocks in the Auto & Vehicle Manufacturers industry here.
Bottom Line
Hedge funds buying STLA shares amid the macroeconomic turmoil indicate the company’s strong fundamentals and growth prospects. Moreover, wall street analysts are bullish on the stock. Given the strong financial performance in the first half of this year, STLA might be a solid buy now.
How Does Stellantis N.V. (STLA) Stack Up Against Its Peers?
While STLA has an overall POWR Rating of A, one might consider looking at its industry peers, Isuzu Motors Limited (ISUZY) and Suzuki Motor Corporation (SZKMY), which also have an overall A (Strong Buy) rating.
STLA shares were trading at $14.25 per share on Monday morning, up $0.11 (+0.78%). Year-to-date, STLA has declined -24.04%, versus a -18.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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