Covestro (1COV) AI Stock Analysis

• Market Cap: €10.95B
• Dividend Yield: N/A
• Average Volume (3M): 38.85K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.20
• Revenue Growth: -5.27%
• EPS Growth: -75.47%
• Country: DE
• Employees: 17,578
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): -0.25
• Shares Outstanding: 189,000,000
• 10 Day Avg. Volume: 28,325
• 30 Day Avg. Volume: 38,851
• PEG Ratio: -1.16
• Price to Book (P/B): 1.59
• Price to Sales (P/S): 0.75
• P/FCF Ratio: 119.10
• 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: €61.25
• Price Target Upside: 3.53% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 52 Neutral
• Price Target: €60.00 ▲(1.42% Upside)

Covestro's overall stock score is primarily impacted by its financial performance challenges, including declining revenues and profitability pressures. Technical analysis provides a neutral outlook, while valuation concerns due to negative earnings further weigh down the score. The absence of earnings call insights and corporate events means these factors do not influence the score.

Positive Factors

Sustainability Initiatives

Covestro's investment in sustainability and circular economy initiatives aligns with global trends, potentially opening new revenue streams and enhancing its market position.

Market Reach

Strong partnerships with major manufacturers provide Covestro with stable revenue streams and a competitive edge in the polymer market.

Operational Efficiency

Despite profitability pressures, positive EBITDA margins indicate operational efficiency, which can support long-term financial health and competitiveness.

Negative Factors

Revenue Decline

Continued revenue decline suggests challenges in maintaining market share and competitiveness, potentially impacting long-term growth prospects.

Profitability Issues

Sustained negative profit margins reflect profitability challenges, which can strain financial resources and limit reinvestment in growth opportunities.

Cash Flow Management

Negative free cash flow highlights inefficiencies in cash management, potentially affecting Covestro's ability to fund operations and strategic initiatives.

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 through the production and sale of its polymers and specialty products across various industrial sectors. The company's primary revenue streams include the sale of polycarbonate sheets and films, polyurethane raw materials, and coatings. Covestro benefits from strong relationships with key customers in industries such as automotive and electronics, which provide consistent demand for its products. Additionally, the company is focused on innovation and sustainability, which allows it to command premium pricing for advanced materials that meet regulatory and environmental standards. Strategic partnerships and collaborations with other firms in technology and sustainability initiatives also contribute to its revenue by expanding its market reach and enhancing product offerings.

Covestro Financial Statement Overview

Summary

Covestro is facing significant financial challenges, with declining revenues and profitability pressures impacting its income statement. The balance sheet remains relatively stable with manageable leverage, but profitability issues are evident. Cash flow management is a concern, with negative free cash flow in the latest period.

Income Statement

Covestro has faced declining revenue over the past few years, with a negative revenue growth rate of -2.2% in the TTM period. The company is experiencing negative net profit margins, indicating losses, and the EBIT margin has turned negative as well. The gross profit margin has decreased from previous years, reflecting pressure on profitability. Despite these challenges, the EBITDA margin remains positive, suggesting some operational efficiency.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 0.59, indicating a balanced approach to leverage. However, the return on equity is negative, reflecting the company's struggles to generate profits from its equity base. The equity ratio remains stable, suggesting a solid capital structure despite profitability issues.

Cash Flow

Operating cash flow remains positive, but the free cash flow is negative in the TTM period, highlighting cash management challenges. The free cash flow growth rate has improved significantly, but the ratio of free cash flow to net income is negative, indicating inefficiencies in converting income into cash. The operating cash flow to net income ratio is positive, suggesting some ability to generate cash from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	13.84B	14.18B	14.38B	17.97B	15.90B	10.71B
Gross Profit	1.95B	2.18B	2.31B	2.56B	4.43B	2.50B
EBITDA	906.00M	1.12B	1.14B	1.18B	3.06B	1.48B
Net Income	-378.00M	-266.00M	-198.00M	-272.00M	1.62B	459.00M
Balance Sheet
Total Assets	13.21B	13.63B	13.64B	14.59B	15.57B	12.92B
Cash, Cash Equivalents and Short-Term Investments	566.00M	518.00M	625.00M	1.20B	714.00M	2.17B
Total Debt	3.66B	3.10B	3.39B	3.66B	2.53B	2.89B
Total Liabilities	7.04B	6.95B	7.02B	7.46B	7.81B	7.28B
Stockholders Equity	6.15B	6.66B	6.59B	7.09B	7.70B	5.61B
Cash Flow
Free Cash Flow	-116.00M	89.00M	232.00M	138.00M	1.43B	530.00M
Operating Cash Flow	758.00M	870.00M	997.00M	970.00M	2.19B	1.23B
Investing Cash Flow	-511.00M	-423.00M	-925.00M	-477.00M	-2.00B	-1.77B
Financing Cash Flow	-318.00M	-565.00M	-639.00M	64.00M	-965.00M	1.20B

Covestro Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 59.16
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 Negative. The current price of 59.16 is below the 20-day moving average (MA) of 59.43, below the 50-day MA of 59.43, and below the 200-day MA of 59.32, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 48.14 is Neutral, neither overbought nor oversold. The STOCH value of 37.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:1COV.

Covestro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SY1	63 Neutral	€9.97B	19.66	13.57%	1.73%	2.15%	29.19%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
BNR	60 Neutral	€7.15B	17.12	9.62%	4.24%	-3.35%	-23.06%
EVK	58 Neutral	€6.67B	15.73	1.08%	9.00%	-5.92%	-58.33%
WCH	58 Neutral	$3.34B	13.86	―	3.70%	-10.63%	-23.15%
1COV	52 Neutral	€10.95B	-29.67	-7.19%	―	-5.27%	-75.47%
LXS	45 Neutral	$1.50B	―	-5.69%	0.58%	-6.82%	71.94%