A Fresh Look at Mercedes-Benz (XTRA:MBG) Valuation After Q3 Profit Drop, Buyback Restart, and Resilient Margins

Mercedes-Benz Group (XTRA:MBG) released its third-quarter earnings, revealing a drop in profit and sales that was driven by sluggish demand from China, U.S. tariffs, and ongoing chip supply worries. Investors took note as the company chose to maintain its full-year outlook and restart a €2 billion share buyback program. This move signals resilience despite some bumps in the road.

See our latest analysis for Mercedes-Benz Group.

Despite recent headwinds, Mercedes-Benz Group’s share price has rebounded, with a 4.6% jump over the past week and a 14.5% gain for the last three months, as investors responded positively to stable guidance and the buyback restart. Looking at the big picture, momentum has picked up in the short term, helping boost the one-year total shareholder return to 9.2%. The long-term total return sits at an impressive 94% over five years.

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With these mixed signals from the earnings report and a recent rally in the share price, the key question for investors is whether Mercedes-Benz Group remains undervalued or if the market has already priced in future growth potential.

Most Popular Narrative: 6.4% Undervalued

Mercedes-Benz Group’s most widely followed narrative pegs fair value at €60.08 per share, just ahead of the recent close of €56.21. This signals optimism on future earnings despite the market’s recent caution.

Strategic emphasis on proprietary digital platforms, notably the MB.OS operating system, will enable Mercedes-Benz to generate high-margin, recurring revenue through over-the-air updates and connected services, driving long-term improvement in operating margins and earnings. The company's continued focus on premium brand positioning and operational efficiency supports structurally higher net margins and cost resilience, counteracting current margin pressures and laying groundwork for future margin expansion.

Read the complete narrative.

Wondering how these digital bets and margin strategies stack up numerically? The narrative hinges on bold projections for profit growth, premium pricing, and new tech revenue streams. Find out what numbers are doing the heavy lifting behind this fair value. Read on to uncover the key financial wildcards driving this story.

Result: Fair Value of €60.08 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in China and rising global tariffs could threaten Mercedes-Benz Group’s profit outlook. This poses a key test for its bullish valuation narrative.

Find out about the key risks to this Mercedes-Benz Group narrative.

Build Your Own Mercedes-Benz Group Narrative

If the popular view doesn’t match your take or you’d rather crunch the numbers yourself, you can shape your own fair value narrative in just a few minutes. Do it your way

A great starting point for your Mercedes-Benz Group research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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