Continental AG (CTTAY) AI Stock Analysis

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Continental AG

(OTC:CTTAY)

67Neutral

Continental AG shows a solid recovery in financial performance, with a strong balance sheet and improving profitability. The stock's technical indicators suggest caution due to its current bearish trend, although long-term stability is still present. The attractive valuation, marked by a low P/E ratio and a decent dividend yield, provides a good investment opportunity. Overall, the stock is positioned for moderate growth amid market volatility.

Continental AG (CTTAY) vs. S&P 500 (SPY)

Market Cap

$13.10B

Dividend Yield2.28%

Average Volume (3M)6.37K

Price to Earnings (P/E)10.4

Beta (1Y)0.76

Revenue Growth-4.06%

EPS Growth1.15%

CountryUS

Employees168,761

SectorConsumer Cyclical

Sector Strength55

IndustryAuto - Parts

Share Statistics

EPS (TTM)0.63

Shares Outstanding2,000,059,800

10 Day Avg. Volume16,828

30 Day Avg. Volume6,371

Financial Highlights & Ratios

PEG Ratio9.05

Price to Book (P/B)N/A

Price to Sales (P/S)0.33

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.71

Price Target Upside47.34% Upside

Rating ConsensusHold

Number of Analyst Covering1

Continental AG Business Overview & Revenue Model

Company DescriptionContinental AG, a leading German automotive manufacturing company, specializes in producing and supplying a wide range of products and services for the automotive sector. Founded in 1871 and headquartered in Hanover, Germany, the company operates through several segments, including Automotive Technologies, Rubber Technologies, and Powertrain Technologies. Continental's core offerings include tires, brake systems, automotive safety, vehicle electronics, and powertrain components. The company is renowned for its innovation in developing advanced solutions for autonomous driving, connectivity, and electrification, serving both original equipment manufacturers (OEMs) and the aftermarket globally.

How the Company Makes MoneyContinental AG generates revenue through a diversified portfolio of products and services across its various business segments. The Automotive Technologies segment provides advanced driver assistance systems, human-machine interface solutions, and electronic components, contributing significantly to the company's earnings. The Rubber Technologies segment, known for producing high-performance tires for passenger cars, trucks, and specialty vehicles, is another major revenue stream. Additionally, the Powertrain Technologies segment offers clean and efficient powertrain solutions, including electrification components, which are increasingly in demand as the automotive industry shifts towards sustainable solutions. Continental's global presence and strategic partnerships with major automotive OEMs and suppliers further bolster its revenue, allowing the company to capitalize on emerging trends in the automotive industry, such as autonomous driving and connectivity.

Continental AG Financial Statement Overview

Summary

Continental AG demonstrates a stable financial position with strong equity and no debt, which is commendable for managing financial risks. However, the company faces challenges in revenue growth and cash flow generation, which need to be addressed to sustain long-term growth. Overall, the financial health is solid with room for improvements in profitability and cash flow efficiency.

Income Statement

Positive

The income statement shows a solid performance with a gross profit margin of 21.66% TTM and a positive net profit margin of 2.51% TTM. However, revenue has slightly declined by 3.25% TTM compared to the previous year, indicating some pressure in top-line growth. EBIT and EBITDA margins remain modest at 2.07% and 9.24% TTM, respectively, suggesting moderate operational efficiency.

Balance Sheet

Very Positive

The balance sheet is robust with an equity ratio of 37.20%, indicating a stable financial foundation. The debt-to-equity ratio is excellent at 0.00 TTM, reflecting no debt burden. The ROE is healthy at 7.31% TTM, showcasing effective use of equity, although it has decreased compared to previous years.

Cash Flow

Positive

Cash flow analysis indicates a decline in free cash flow by 8.46% TTM, which could impact future investments or debt repayments. The operating cash flow to net income ratio is strong at 3.11, indicating good cash generation relative to profit, while the free cash flow to net income ratio stands at 1.08, showing less cash retention.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
40.07B	41.42B	39.41B	33.77B	37.72B	44.48B
	Gross Profit
8.68B	8.81B	8.31B	7.74B	8.59B	10.59B
	EBIT
831.30M	799.60M	1.33B	1.79B	-317.60M	-261.50M
	EBITDA
3.70B	4.26B	4.01B	4.29B	3.40B	4.97B
	Net Income Common Stockholders
1.00B	1.16B	112.20M	1.44B	-918.80M	-1.17B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.04B	2.92B	2.44B	2.00B	2.64B	3.11B
	Total Assets
37.75B	37.75B	37.93B	35.84B	39.64B	42.57B
	Total Debt
7.17B	7.16B	7.67B	6.24B	7.32B	7.61B
	Net Debt
4.25B	4.48B	5.23B	4.24B	4.68B	4.49B
	Total Liabilities
23.63B	23.63B	24.19B	23.20B	27.00B	26.69B
	Stockholders Equity
13.68B	13.68B	13.26B	12.19B	12.26B	15.40B
Cash Flow		Free Cash Flow
1.08B	1.18B	126.30M	1.08B	587.90M	1.19B
	Operating Cash Flow
3.12B	3.33B	2.30B	2.95B	2.71B	4.41B
	Investing Cash Flow
-1.96B	-2.17B	-2.20B	-1.58B	-1.84B	-3.65B
	Financing Cash Flow
-1.18B	-1.13B	653.50M	-1.16B	-1.14B	-220.00M

Continental AG Technical Analysis

Technical Analysis Sentiment

Negative

Last Price6.59

Price Trends

50DMA

7.20

Negative

100DMA

6.97

Negative

200DMA

6.63

Negative

Market Momentum

MACD

0.03

Positive

RSI

39.05

Neutral

STOCH

-0.57

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTTAY, the sentiment is Negative. The current price of 6.59 is below the 20-day moving average (MA) of 7.27, below the 50-day MA of 7.20, and below the 200-day MA of 6.63, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 39.05 is Neutral, neither overbought nor oversold. The STOCH value of -0.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CTTAY.

Continental AG Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
APTV	70 Outperform	$12.49B	7.92	17.57%	―	-1.69%	-33.56%
CTTAY	67 Neutral	$13.10B	10.43	8.43%	2.28%	-4.06%	1.15%
ALV	66 Neutral	$6.45B	10.36	26.69%	3.60%	-0.80%	39.95%
LEA	64 Neutral	$4.44B	9.24	10.81%	4.10%	-0.70%	-7.27%
BWA	62 Neutral	$5.67B	17.15	6.46%	1.77%	-11.10%	-46.32%
MBLY	60 Neutral	$12.29B	―	-22.88%	―	-20.44%	-11112.94%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%

* Consumer Cyclical Sector Average

Performance Comparison

CTTAY

Continental AG

6.59

-0.27

-3.94%

ALV

Autoliv

79.70

-32.55

-29.00%

BWA

BorgWarner

26.89

-6.17

-18.66%

APTV

Aptiv

49.42

-24.77

-33.39%

LEA

Lear

82.87

-47.04

-36.21%

MBLY

Mobileye Global, Inc. Class A

15.14

-16.58

-52.27%

Continental AG Earnings Call Summary

Earnings Call Date: Mar 4, 2025 | % Change Since: -9.48% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a balanced outlook with significant achievements in cost savings and tire segment performance, offset by persistent challenges in ContiTech and North America, and a lower than expected order intake.

Highlights

Improvement in Adjusted EBIT Margin

The company significantly improved its adjusted EBIT margin by 260 basis points year-over-year, driven by a €125 million cash inflow from Vitesco Technologies.

Strong Performance in the Tire Segment

Tire segment delivered a strong quarter with 3.5% organic sales growth and a 2% volume increase, capitalizing on the passenger vehicle replacement market.

Progress in Automotive Transformation Program

Achieved over 90% of price agreement conclusions, reduced over 3,000 employees, and increased the cost savings target from €150 million to €200 million for 2024.

Strategic Focus on AI and R&D Efficiency

Achieved a 30 basis points reduction in R&D to sales percentage with further AI integration projected to cut development time by up to 20%.

Notable Order Wins in Safety and Motion

Secured €1.8 billion in new business, including major awards from Asian customers, growing the position in the Chinese market.

Lowlights

Weak Performance in ContiTech

ContiTech faced significant headwinds due to weak industrial and automotive markets, leading to a reduction in sales guidance by €400 million.

Challenges in North American Market

Continued challenges due to customer mix, technology change cycles, and higher inventory levels, affecting performance.

Lower Than Expected Order Intake

New orders of €3.7 billion were below expectations, reflecting delays in customer sourcing decisions due to a challenging market environment.

Revised Group Tax Rate

The group tax rate was revised upward to 30% from the previously assumed 27%, due to foreign minimum taxes and withholding taxes.

Persistent Challenges in ContiTech

No signs of recovery in key markets such as energy and manufacturing, leading to a further reduction in ContiTech’s outlook.

Company Guidance

During the Q3 2024 results call, Continental AG provided an optimistic outlook despite challenging market conditions. The company reported a significant improvement in its adjusted EBIT margin, which increased by 260 basis points year-over-year, partly due to a €125 million cash inflow from Vitesco Technologies. In the automotive sector, Continental successfully concluded most of its pricing negotiations, resulting in a 140 basis points improvement in adjusted EBIT. The tires sector saw a 2% volume growth, driven by strong replacement demand in Europe and APAC, contributing to a 120 basis points increase in adjusted EBIT margin. However, the ContiTech sector faced headwinds due to weak industrial markets, prompting a revised sales guidance between €6.2 billion and €6.6 billion, with an adjusted EBIT margin guidance of 5.8% to 6.3%. Free cash flow was impacted by elevated working capital, despite benefiting from the Vitesco cash inflow. Continental remains committed to its cost-saving initiatives, having achieved €100 million in savings by Q3, and aims for €200 million by year-end, with a total target of €400 million by 2025. The company also noted its strategic efforts in R&D efficiency, aiming for a high single-digit R&D to sales percentage by 2027.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.