6) Stellantis N.V. (NYSE:STLA)
Market cap (As of 25 October): $41.2 billion
Forward P/E (As of 25 October): 3.62x
% Decline on a YTD Basis: ~40%
Number of Hedge Fund Holders: 31
Stellantis N.V. (NYSE:STLA) is engaged in designing, engineering, manufacturing, distributing, and selling automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, mobility services, and production systems.
Wall Street analysts believe that the company’s JV with Leapmotor, which is a rising Chinese EV brand, should support Stellantis N.V. (NYSE:STLA) over the long term. This can help leverage China’s cost advantages in EV and battery production and expertise in software and connectivity technologies. The company’s strategy minimizes direct EBIT exposure in China. It will also enable Stellantis N.V. (NYSE:STLA) to benefit from China’s manufacturing efficiencies and technological advancements.
Stellantis N.V. (NYSE:STLA)’s product portfolio, mainly its iconic US brands Ram and Jeep, should act as potential tailwinds moving forward. The company remains focused on operational improvements, cost reduction, and aligning production with market demand. Stellantis N.V. (NYSE:STLA) is committed to posting double-digit margins and positive FCF by 2030. Moreover, it plans to stabilize the situation in Europe and gain a profitable share via new product releases.
Stellantis N.V. (NYSE:STLA) has been emphasizing multi-energy and software-related technologies, with a strong commitment to electrification. The company remains comfortable with the multi-energy platform strategy and is focused on reducing structural costs. Analysts at Sanford C. Bernstein initiated coverage on the shares of Stellantis N.V. (NYSE:STLA) on 28th June. They gave a “Market Perform” rating and a $23.50 price objective.
Ariel Investments, an investment management company, released its first-quarter 2024 investor letter. Here is what the fund said:
“We added multinational automotive manufacturing company, Stellantis N.V. (NYSE:STLA), which was formed from the merger of Fiat Chrysler Automobiles and the French PSA Group in the period. With deal synergies lowering overall operating expenses and contributing to healthy free cash flow generation, management has begun increasing shareholder returns through dividends and share buybacks. Although some investors remain on the sidelines over concerns auto sales and margins have peaked, STLA’s average transaction price is growing year-over-year. We think this momentum will continue and expect STLA to deliver double-digit operating profit margin as it further expands its leading position in the Middle East and South America. Furthermore, the company’s Leapmotor joint venture presents a unique way to benefit from the strengths of Chinese original equipment manufacturers. Meanwhile, in the current electric vehicle slowdown environment, we believe STLA is best positioned to weather the storm. Management believes it can maintain profitability and is open to rationalizing its 14 brands. STLA seeks to be number one in the commercial vehicle segment by 2027, which comes with high customer stickiness, solid profitability and recurring revenue streams.”
