Update shared on16 Jul 2025
Fair value Decreased 24%With today's shocking quarterly earnings, Renault's prospects certainly have taken a turn for the worse. Not disastrously so, but - together with the unpleasant surprise of Luca de Meo's departure as CEO - markedly enough to warrant a revision of my originally rather upbeat estimates about the automaker's valuation.
Thus, I lowered my revenue growth projection to 1.5 per cent p.a., net profit margins to 3.5 per cent and future PE to 11, complete with a hefty discount rate at 11.8 per cent. Yet still, these inputs yield a fair valuation for RNO to the tune of some €49 a share, which serves to demonstrate the extreme exaggeration of today's sell-off.
I stick to my original take that, particularly at these extremely oversold levels, Renault is a promising investment in the auto sector.
This whole analysis, mind you, can only hold true if additional tariffs can be avoided or the existing ones even be lowered; otherwise, all assumptions made here are subject to brutal downward revisions. The steep discount rate thus serves to take the related uncertainty into account.
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