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Continental Aktiengesellschaft (DE:CON)
XETRA:CON
RESEARCH TOOLSreports
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Continental Aktiengesellschaft
(XETRA:CON)
Rating:74Outperform
Price Target:
€85.00
▲(12.97%Upside)
Positive Factors
Automotive and Tires outlook
CON hosted its public 1Q25 pre-close call with a constructive message on Automotive and Tires consistent with previous indications.
Tires revenue
CON sees higher replacement demand and positive price/mix in 2025, which implies that CON currently sees Tires revenue in the upper half of the range with downside protection if volumes turn out weaker than thought.
Negative Factors
ContiTech performance
ContiTech suffers from weak LV production and muted industrial demand.
FY25 group adj. EBIT guidance
CON's FY25 group adj. EBIT guidance implies c.8% downside vs current Visible Alpha consensus at the mid-point, with a soft revenue and margin outlook in Automotive.
Tires EBIT margin
Tires adj. EBIT margin is seen at the lower end of the full-year range of 13.3-14.3%, which implies c5% upside vs. current VisibleAlpha consensus.
Continental Aktiengesellschaft (CON) vs. iShares MSCI Germany ETF (EWG)
Market Cap
$15.21B
Dividend Yield3.29%
Average Volume (3M)378.65K
Price to Earnings (P/E)11.8
Beta (1Y)1.11
Revenue Growth-14.83%
EPS Growth78.73%
CountryDE
Employees96,426
SectorConsumer Cyclical
Sector Strength65
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.06
Shares Outstanding200,005,980
10 Day Avg. Volume249,256
30 Day Avg. Volume378,652
Financial Highlights & Ratios
PEG Ratio1.13
Price to Book (P/B)1.06
Price to Sales (P/S)0.00
P/FCF Ratio7.99
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$81.87Price Target Upside8.81% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Continental Aktiengesellschaft Business Overview & Revenue Model
Company DescriptionContinental Aktiengesellschaft, a technology company, offers intelligent solutions for vehicles, machines, traffic, and transportation worldwide. It operates through four sectors: Automotive, Tires, ContiTech, and Contract Manufacturing. The company offers safety, brake, chassis, motion, and motion control systems; solutions for assisted and automated driving; and audio and camera solutions for the vehicle interior, as well as intelligent information and communication technology solutions. It also provides tires for cars, trucks, buses, two-wheel and specialist vehicles, bicycles, and motor vehicles, as well as digital tire monitoring and management systems. In addition, the company develops and manufactures cross-material, environmentally friendly, and intelligent products and systems for automotive, railway engineering, mining, agriculture, and other industries, as well as provides contract manufacturing services. It sells its products through 944 company owned tire outlets and approximately 5,200 franchise locations The company was formerly known as Continental-Caoutchouc- und Gutta-Percha Compagnie. Continental Aktiengesellschaft was founded in 1871 and is headquartered in Hanover, Germany.
How the Company Makes MoneyContinental makes money primarily through the sale of automotive components and technologies. Its revenue model is diversified across several key streams, including the production and sale of tires for a variety of vehicles, from passenger cars to commercial trucks. Additionally, the company generates significant income from its automotive group, which provides advanced technologies in areas like automated driving, vehicle safety, and powertrain systems. Continental also benefits from strategic partnerships and collaborations with major automotive manufacturers and technology firms, enhancing its product offerings and expanding its market reach. Furthermore, the company's focus on research and development enables it to innovate continuously, maintaining its competitive edge in the automotive industry.
Continental Aktiengesellschaft Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q3-2024)
| % Change Since: 7.33%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
Continental AG's Q3 2024 earnings call highlights several positive developments such as improved EBIT margins, successful pricing negotiations, and strong performance in the tire segment. However, these are balanced by significant challenges including weak industrial markets impacting ContiTech, reduced order intake, and persistent challenges in the automotive segment, particularly in North America. The overall sentiment remains cautious but demonstrates resilience in the face of market difficulties.Q3-2024 Updates
Positive Updates
Improvement in Adjusted EBIT Margin
Continental AG reported a significant improvement in its adjusted EBIT margin by 260 basis points year-over-year, driven by strategies including a €125 million cash inflow from Vitesco Technologies.
Successful Pricing Negotiations in Automotive
The automotive team concluded nearly all pricing negotiations, which contributed to a 140 basis point improvement in adjusted EBIT margin despite the challenging market.
Tire Segment Growth
The tire segment showed a strong performance with 3.5% organic sales growth and a 120 basis point increase in adjusted EBIT margin, driven by improvements in passenger vehicle replacement and truck tire business.
Cost Savings and Efficiency Gains
Continental achieved €100 million in cost savings year-to-date and raised the cost-cutting target to €200 million by year-end 2024, with further savings assured for 2025.
R&D Efficiency Improvements
A 30 basis point reduction in R&D to sales percentage was achieved, with AI being used to cut development time by up to 20%.
Negative Updates
Weak Industrial Markets Impacting ContiTech
ContiTech was heavily burdened by persistently weak industrial markets, resulting in a downgrade of its sales and EBIT margin guidance.
Automotive Market Challenges
Continental faced weak global production volumes, which impacted the automotive segment's sales and led to an expectation of landing in the lower half of the adjusted EBIT margin guidance.
Lower Free Cash Flow
Operating cash flow was down due to higher working capital and lower cash inflow from weak sales in July and August.
Weak Order Intake in Automotive
Automotive's order intake was below expectations at €3.7 billion, reflecting the challenging market environment with delayed sourcing decisions from customers.
Challenges in North America
The automotive segment in North America faced persistent challenges, including customer mix and technology change cycles, affecting performance.
Company Guidance
During the Q3 2024 call, Continental AG provided several key metrics and updates on their strategic and financial performance. The company reported a significant improvement in the adjusted EBIT margin, which increased by 260 basis points year-over-year, aided partially by a €125 million cash inflow from Vitesco Technologies. Group sector highlights included a notable organic sales growth of 3.5% in tires and a 140 basis points improvement in the automotive sector's adjusted EBIT margin. However, ContiTech faced challenges due to weak industrial markets, prompting a revised sales outlook to €6.2 billion to €6.6 billion and an adjusted EBIT margin of 5.8% to 6.3%. The company also highlighted a substantial reduction in headcount, contributing to a targeted €200 million cost savings for 2024, with plans to achieve an additional €200 million in 2025. Despite challenges, Continental reaffirmed its commitment to achieving its full-year guidance, adjusting the overall group sales outlook to €39.5 billion to €42 billion.Continental Aktiengesellschaft Financial Statement Overview
Summary
Continental Aktiengesellschaft exhibits stable profitability with a strong capital structure. The company manages its debt levels well, with a balanced debt-to-equity ratio and a robust operating cash flow to net income ratio. However, volatility in revenue and free cash flow presents some challenges.Income Statement
Continental Aktiengesellschaft shows a stable gross profit margin around 22-23% in recent years. Net profit margin has improved significantly since 2020, reaching 2.9% in 2024. However, revenue has fluctuated, with a decline from 2023 to 2024. EBIT and EBITDA margins have remained modest, reflecting some operational challenges.68
Positive
Balance Sheet
The company maintains a balanced debt-to-equity ratio of approximately 0.48 in 2024, indicating prudent leverage management. The equity ratio stands at 38.8%, suggesting a stable capital structure. Return on equity remains moderate at 8.1%, signaling stable returns for shareholders.74
Positive
Cash Flow
Operating cash flow has been relatively consistent, but free cash flow has seen fluctuations, with a significant drop in 2024. The operating cash flow to net income ratio is robust at 2.51 for 2024, indicating strong cash generation relative to net income. However, free cash flow growth has been inconsistent.65
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 39.72B | 41.42B | 39.41B | 33.77B | 37.72B |
| Gross Profit | 8.80B | 8.81B | 8.31B | 7.74B | 8.59B |
| EBITDA | 4.43B | 4.21B | 4.01B | 4.11B | 2.46B |
| Net Income | 1.17B | 1.16B | 112.20M | 1.44B | -918.80M |
Balance Sheet | |||||
| Total Assets | 36.97B | 37.75B | 37.93B | 35.84B | 39.64B |
| Cash, Cash Equivalents and Short-Term Investments | 2.97B | 2.92B | 2.44B | 2.00B | 2.64B |
| Total Debt | 6.91B | 7.17B | 7.67B | 6.24B | 7.32B |
| Total Liabilities | 22.17B | 23.63B | 24.19B | 23.20B | 27.00B |
| Stockholders Equity | 14.35B | 13.68B | 13.26B | 12.19B | 12.26B |
Cash Flow | |||||
| Free Cash Flow | 996.00M | 1.18B | 126.30M | 1.08B | 587.90M |
| Operating Cash Flow | 2.93B | 3.33B | 2.30B | 2.95B | 2.71B |
| Investing Cash Flow | -1.82B | -2.17B | -2.20B | -1.58B | -1.84B |
| Financing Cash Flow | -1.07B | -1.13B | 653.50M | -1.16B | -1.14B |
Continental Aktiengesellschaft Technical Analysis
Neutral
75.24
Price Trends
75.48
Negative
70.33
Positive
65.67
Positive
Market Momentum
0.50
Negative
49.68
Neutral
30.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:CON, the sentiment is Neutral. The current price of 75.24 is above the 20-day moving average (MA) of 74.78, below the 50-day MA of 75.48, and above the 200-day MA of 65.67, indicating a neutral trend. The MACD of 0.50 indicates Negative momentum. The RSI at 49.68 is Neutral, neither overbought nor oversold. The STOCH value of 30.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DE:CON.
Continental Aktiengesellschaft Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $15.21B | 11.80 | 10.07% | 3.29% | -14.83% | 78.73% | |
62 Neutral | $16.79B | 10.79 | -7.01% | 3.04% | 1.73% | -25.15% | |
| ― | €283.85M | ― | -19.89% | 3.35% | ― | ― | |
| ― | €9.67B | 30.86 | 10.12% | 1.09% | ― | ― | |
| ― | €798.03M | 11.13 | 12.40% | 4.83% | ― | ― | |
| ― | €4.57B | 21.23 | -19.48% | 5.17% | ― | ― | |
70 Outperform | €13.40B | 31.44 | 13.95% | 2.10% | -1.57% | -26.71% |
* Consumer Cyclical Sector Average
Performance Comparison
DE:CON
Continental Aktiengesellschaft
75.24
18.18
31.86%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.