Covestro (1COV) AI Stock Analysis

• Market Cap: €11.19B
• Dividend Yield: N/A
• Average Volume (3M): 30.31K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.19
• Revenue Growth: 0.01%
• EPS Growth: -88.69%
• Country: DE
• Employees: 17,578
• Sector: Basic Materials
• Sector Strength: 73
• Industry: Chemicals - Specialty
• EPS (TTM): -0.85
• Shares Outstanding: 189,000,000
• 10 Day Avg. Volume: 58,694
• 30 Day Avg. Volume: 30,310
• PEG Ratio: 0.21
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 50.57
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €61.80
• Price Target Upside: 1.58% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 57 Neutral
• Price Target: €62.00 ▲(1.91%Upside)

Covestro's overall stock score is primarily impacted by financial performance and valuation challenges, with declining profitability and a negative P/E ratio. However, positive technical momentum offers some optimism, mitigating the downsides.

Covestro Business Overview & Revenue Model

Company Description

Covestro AG supplies high-tech polymer materials and related application solutions. It operates in two segments, Performance Materials, and Solutions & Specialties. The Performance Materials segment develops, produces, and supplies high-performance materials, such as polyurethanes and polycarbonates, and base chemicals, which include diphenylmethane diisocyanate (MDI), toluylene diisocyanate, long-chain polyols, and polycarbonate resins for use in furniture and wood processing, construction, automotive, and transportation industries, as well as roof structures, insulation for buildings and refrigerators, mattresses, car seats, and other applications. The Solutions & Specialties segment comprises a range of polymer products, including precursors for coatings and adhesives, polycarbonates, MDI specialties and polyols, specialty films, elastomers, and thermoplastic polyurethanes that are used in automotive and transportation, electrical, electronics and household appliances, construction, and healthcare industries, as well as composite resins for wind turbine, rotor blades, laptop cases, and floodlights. The company markets its products through trading houses and distributors. It operates in Europe, the Middle East, Africa, Latin America, the United States, Canada, and the People's Republic of China. The company was founded in 1863 and is headquartered in Leverkusen, Germany.

How the Company Makes Money

Covestro generates revenue primarily through the sale of its high-performance polymer materials across its three business segments. In the Polyurethanes segment, the company produces raw materials for rigid and flexible foams used in insulation, automotive seating, and mattresses. The Polycarbonates segment focuses on producing thermoplastic polymers that are utilized in applications such as automotive components, electronic devices, and medical products. The Coatings, Adhesives, and Specialties (CAS) segment provides materials for coatings, adhesives, and sealants used in various industries. Covestro's earnings are augmented by its strong emphasis on research and development, which drives innovation and helps the company maintain a competitive edge in the market. Additionally, strategic partnerships and collaborations with other industry leaders enable Covestro to expand its market reach and enhance its product offerings, contributing further to its revenue streams.

Covestro Financial Statement Overview

Summary

Covestro is experiencing declining revenue and profitability, with negative net profit and free cash flow, indicating financial challenges. While leverage is manageable, the company struggles with returns and cash flow stability.

Income Statement

Covestro's income statement reflects a challenging period with declining revenue and profitability. The TTM shows a negative net profit margin of -2.76%, indicating losses. The gross profit margin has decreased to 14.4% in the TTM from 15.4% in the previous year, pointing to cost pressures. EBIT and EBITDA margins have also weakened, with EBIT margin turning negative. The company faces declining revenue growth, with a TTM revenue drop of 0.2% compared to the previous annual period. These factors highlight significant profitability challenges.

Balance Sheet

The balance sheet reveals moderate financial health. Debt-to-equity ratio is at 0.58 in the TTM, showing manageable leverage. However, the equity ratio has slightly decreased to 45.6% from 48.8% in the previous year, indicating less stability in equity financing. Return on equity is negative due to net losses, suggesting inefficiencies in generating shareholder returns. Overall, Covestro maintains a balanced financial structure but faces challenges in equity efficiency.

Cash Flow

Cash flow analysis indicates operational challenges. The TTM operating cash flow to net income ratio is negative due to net losses, although operating cash generation remains relatively stable. Free cash flow has turned negative in the TTM, reflecting increased capital expenditures and declining profitability. The free cash flow to net income ratio is also negative, highlighting cash flow pressures. Covestro's cash flow position suggests potential liquidity strains if trends persist.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	14.15B	14.18B	14.38B	17.97B	15.90B	10.71B
Gross Profit	2.04B	2.18B	2.31B	2.56B	4.43B	2.50B
EBITDA	949.00M	1.12B	1.14B	1.11B	3.06B	1.44B
Net Income	-391.00M	-266.00M	-198.00M	-272.00M	1.62B	459.00M
Balance Sheet
Total Assets	14.05B	13.63B	13.64B	14.59B	15.57B	12.92B
Cash, Cash Equivalents and Short-Term Investments	789.00M	518.00M	625.00M	1.20B	714.00M	2.17B
Total Debt	3.71B	3.10B	3.39B	3.66B	2.53B	2.89B
Total Liabilities	7.63B	6.95B	7.02B	7.46B	7.81B	7.28B
Stockholders Equity	6.41B	6.66B	6.59B	7.09B	7.70B	5.61B
Cash Flow
Free Cash Flow	-56.00M	89.00M	232.00M	138.00M	1.43B	530.00M
Operating Cash Flow	799.00M	870.00M	997.00M	970.00M	2.19B	1.23B
Investing Cash Flow	-768.00M	-423.00M	-925.00M	-477.00M	-2.00B	-1.77B
Financing Cash Flow	12.00M	-565.00M	-639.00M	64.00M	-965.00M	1.20B

Covestro Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 60.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:1COV, the sentiment is Positive. The current price of 60.84 is above the 20-day moving average (MA) of 60.14, above the 50-day MA of 59.77, and above the 200-day MA of 58.12, indicating a bullish trend. The MACD of 0.24 indicates Negative momentum. The RSI at 57.65 is Neutral, neither overbought nor oversold. The STOCH value of 71.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:1COV.

Covestro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	58 Neutral	HK$17.13B	4.61	-6.43%	5.19%	-3.18%	-62.89%
1COV	57 Neutral	€11.19B	―	-6.00%	―	0.01%	-88.69%
0MPT		€8.17B	15.35	11.49%	3.22%	―	―
0QDS		€8.04B	26.79	3.25%	5.88%	―	―
0G6T		€12.81B	26.78	12.56%	1.14%	―	―
LNXSF		$2.56B	―	-3.92%	0.39%	―	―
WKCMF		$3.64B	13.93	5.37%	3.64%	―	―