If you have been keeping an eye on Renault stock and mulling over your next move, you are not alone. With the price dipping by 3.2% over the past week and sliding 1.6% in the last month, it is natural to wonder whether now is a risk or an opportunity. The year-to-date picture feels even more dramatic, showing a drop of 27.3%. However, if you look at the longer term, there is a transformation: over three and five years, Renault has delivered impressive returns of 17.7% and 63.5% respectively. Clearly, there is more at play than short-term uncertainty.
Recent news paints a picture of cautious optimism for Renault’s future. Regulatory shifts in Europe, heightened interest in electric vehicles, and continued partnerships with global automakers have all been in focus. While these developments sometimes bring volatility, they are also signaling structural changes that could alter the company’s long-term value. Investors seem to be weighing Renault’s potential for growth against a backdrop of industrywide shifts.
What really stands out, though, is Renault’s valuation score: 5 out of 6, meaning the company appears undervalued across most standard checks. But how do these methods add up, and are they the best way to assess what Renault is actually worth? Up next, let’s explore each valuation approach and see what hidden clues they might reveal. Before we finish, a sharper way to think about Renault’s value will also be shared that you will not want to miss.
Why Renault is lagging behind its peers
Approach 1: Renault Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model estimates the true worth of a company by taking its future expected cash flows and discounting them back to today’s value. This approach calculates what Renault could be worth right now, based on the money it is expected to generate for shareholders.
For Renault, the latest reported Free Cash Flow stands at €844 million. Analysts have supplied projections for the next five years, with Simply Wall St extending these out to 2035. By 2029, forecasted free cash flow reaches €2.3 billion. By 2035, estimates climb to roughly €2.9 billion. These figures suggest a path of steady growth in free cash flow over time, even as industry conditions evolve.
Crunching these numbers, Renault's estimated intrinsic value lands at €82.23 per share. This outcome shows the stock is trading at a significant 58.4% discount to its fair value based on projected cash flows.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Renault is undervalued by 58.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
Approach 2: Renault Price vs Sales (P/S) Ratio
The Price-to-Sales (P/S) ratio is a widely used valuation tool for auto companies like Renault, especially when profits can be cyclical or volatile. This metric assesses how much investors are willing to pay for each euro of the company's sales. It is useful for industries where revenue growth is a key performance indicator.
Growth expectations and risk both influence what qualifies as a “fair” P/S ratio. Companies with strong growth prospects or lower risks often deserve a higher multiple, while stagnant or riskier firms typically trade at a discount.
Renault’s current P/S ratio is 0.16x, which is much lower than the auto industry average of 0.83x and also below its peer group average of 0.44x. This could signal that the market is cautious or pricing in extra uncertainty for Renault compared to its peers.
Simply Wall St’s “Fair Ratio” offers a more tailored benchmark. For Renault, the Fair Ratio is 0.24x, a figure that factors in not just industry averages but also its unique earnings growth, margins, risks, and market capitalization. This context provides a more relevant comparison than looking solely at sector or peer averages.
Comparing the actual P/S of 0.16x to the Fair Ratio of 0.24x shows Renault trades slightly below what is considered fair. This suggests modest undervaluation, but not a dramatic disconnect from intrinsic value.
Result: UNDERVALUED
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Renault Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a powerful way to combine your perspective about Renault with financial forecasts to arrive at a fair value you truly believe in.
A Narrative is your own story or thesis for a company, connecting what you think about Renault’s future, including its growth, margins, risks, and strategic moves, to specific financial outcomes and resulting fair values. Rather than just following the numbers, Narratives let you lay out your reasoning behind them, showing how your view of recent news, leadership changes, or new product launches informs your estimates for revenue, earnings, and valuation multiples.
On Simply Wall St’s Community page, used by millions of investors, Narratives make this process easy and accessible. With a few inputs, you can create or view different Renault Narratives, compare your fair value to the current share price, and quickly gauge whether you think the stock is a buy, hold, or sell.
What sets Narratives apart is that they adjust dynamically as new information arrives, so your thesis and fair value always remain relevant. For example, some investors’ Narratives see Renault worth as much as €63.7 per share based on aggressive market share gains and margins, while others use conservative assumptions and arrive at €38.0. Narratives put your investment thinking front and center, so you can act with greater confidence.
Do you think there's more to the story for Renault? Create your own Narrative to let the Community know!
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.
Valuation is complex, but we're here to simplify it.
Discover if Renault might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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