No. of Recommendations: 9
From Barron's (sorry, no link)
'It is VW's valuation that deserves a closer look. Even with Friday's gains, VW shares are trading for about 3.7 times estimated 2023 earnings. VW shares are actually cheaper than that: In one way, they are practically free.
VW owns roughly 75% of Porsche AG (P911.Germany), the maker of the Porsche sports car. That stake is worth $83 billion, while VW's entire market capitalization is about $80 billion.
Excluding Porsche earnings, VW generated about $16 billion in operating profit last year. That's more than the $14.5 billion operating profit General Motors (GM) earned in 2022, and GM has a market cap of about $56 billion.'
Any comments?
No. of Recommendations: 2
Any comments?
Yes.
With the intention to diversify from holding Berkshire only, last Oct I bought Lufthansa. Three months and +60% later I swapped it against VW (US stock symbol: VOW) --- too soon as Lufthansa continued to rise faster than VW. Nevertheless I think longer term VW will be the better investment.
- With Revenue of around $280M
- Growth and Op.Margin conservatively estimated at 6% and 8% respectively
- and current Market Cap $80B***
the multiple of it's earnings in 5 years you pay now is as extremely low as it is for Meta or Carmax (around 4x) --- with some differences though:
- VW's growth/margin history is far less constant, making 5 year predictions more of a bet (but even with radically lowered growth/margin estimates IV5 is still low)
- It traditionally pays a high dividend, currently 4%.
- The so-called "VW law" gives the state (to be exact: "Niedersachsen") a "Sperrminoritaet" = it can block important decisions --- which is if I remember correctly why Mungofitch on the old board expressed his unwillingness to ever invest in VW.
***I don't know where Barron's $90B you quote come from; maybe they mean Euro's?
No. of Recommendations: 1
Correction: It's not Barron's who confused USD and EUR, but me: EUR 83B respectively $90B.
