Continental Aktiengesellschaft (CON) AI Stock Analysis

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Continental Aktiengesellschaft

(XETRA:CON)

Rating:61Neutral

Price Target:―

Continental Aktiengesellschaft's overall stock score reflects a solid financial foundation with a stable profitability and capital structure. While the stock is attractively valued, the short-term technical analysis indicates potential challenges with recent downward price trends. The absence of recent earnings call data and significant corporate events leaves the analysis more reliant on financial and technical metrics.

Positive Factors

Tires EBIT Margin

Tires adjusted EBIT margin is seen at the lower end of the full-year range, implying about 5% upside versus current consensus.

Tires Revenue

Higher replacement demand and positive price/mix indicate that CON sees Tires revenue in the upper half of the range.

Negative Factors

Automotive Revenue

Automotive revenue in 4Q24 came in approximately 2% below consensus, with adjusted EBIT also missing expectations.

ContiTech Performance

ContiTech is facing challenges due to weak light vehicle production and muted industrial demand.

Free Cash Flow

CON's FY25 free cash flow guidance of €0.8-1.2bn falls short of the consensus estimate of €1.5bn.

Continental Aktiengesellschaft (CON) vs. iShares MSCI Germany ETF (EWG)

Market Cap

$15.19B

Dividend Yield3.03%

Average Volume (3M)493.83K

Price to Earnings (P/E)11.8

Beta (1Y)1.17

Revenue Growth-14.83%

EPS Growth78.73%

CountryDE

Employees96,426

SectorConsumer Cyclical

Sector Strength74

IndustryAuto - Parts

Share Statistics

EPS (TTM)1.06

Shares Outstanding200,005,980

10 Day Avg. Volume457,734

30 Day Avg. Volume493,828

Financial Highlights & Ratios

PEG Ratio1.11

Price to Book (P/B)1.04

Price to Sales (P/S)0.00

P/FCF Ratio7.83

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$80.28

Price Target Upside5.28% Upside

Rating ConsensusStrong 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 its diverse range of products and services across its major divisions. The Tire division generates revenue by manufacturing and selling a wide variety of tires for passenger cars, trucks, and industrial applications, serving both the original equipment and replacement markets. The Automotive Technologies division contributes to earnings by providing advanced safety features, powertrain technologies, and vehicle networking systems to automotive manufacturers. Additionally, the ContiTech division enhances revenue through its production of rubber and plastic products for a wide array of industries beyond automotive. The company's revenue streams are further bolstered by strategic partnerships and collaborations with other technology firms and automotive manufacturers, enabling innovation and market expansion.

Continental Aktiengesellschaft Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q3-2024)

% Change Since: 8.79%|

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 and a strong capital structure. The company effectively manages its debt levels, maintaining a balanced debt-to-equity ratio. However, there are some challenges, such as revenue fluctuations and inconsistent free cash flow growth. Despite these, the company maintains a sound financial position with steady cash generation.

Income Statement

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
34.84B	39.72B	41.42B	39.41B	33.77B	37.72B
	Gross Profit
8.15B	8.80B	8.81B	8.31B	7.74B	8.59B
	EBIT
1.50B	852.00M	799.60M	1.33B	1.79B	-317.60M
	EBITDA
4.55B	4.43B	4.26B	4.01B	4.11B	2.46B
	Net Income Common Stockholders
1.29B	1.17B	1.16B	112.20M	1.44B	-918.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.74B	2.97B	2.92B	2.44B	2.00B	2.64B
	Total Assets
37.36B	36.97B	37.75B	37.93B	35.84B	39.64B
	Total Debt
0.00	6.91B	7.17B	7.67B	6.24B	7.32B
	Net Debt
-1.67B	3.94B	4.25B	5.23B	4.24B	4.68B
	Total Liabilities
22.56B	22.17B	23.63B	24.19B	23.20B	27.00B
	Stockholders Equity
14.37B	14.35B	13.68B	13.26B	12.19B	12.26B
Cash Flow		Free Cash Flow
1.90B	996.00M	1.18B	126.30M	1.08B	587.90M
	Operating Cash Flow
3.67B	2.93B	3.33B	2.30B	2.95B	2.71B
	Investing Cash Flow
-1.78B	-1.82B	-2.17B	-2.20B	-1.58B	-1.84B
	Financing Cash Flow
-1.33B	-1.07B	-1.13B	653.50M	-1.16B	-1.14B

Continental Aktiengesellschaft Technical Analysis

Technical Analysis Sentiment

Positive

Last Price76.26

Price Trends

50DMA

68.49

Positive

100DMA

67.00

Positive

200DMA

62.49

Positive

Market Momentum

MACD

2.41

Positive

RSI

60.29

Neutral

STOCH

64.02

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:CON, the sentiment is Positive. The current price of 76.26 is above the 20-day moving average (MA) of 75.12, above the 50-day MA of 68.49, and above the 200-day MA of 62.49, indicating a bullish trend. The MACD of 2.41 indicates Positive momentum. The RSI at 60.29 is Neutral, neither overbought nor oversold. The STOCH value of 64.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
Sector *	62 Neutral	$6.90B	11.24	2.93%	3.89%	2.68%	-24.71%
CON	61 Neutral	$15.19B	11.78	10.07%	3.03%	-14.83%	78.73%
0MG5		€276.57M	―	-19.89%	3.43%	―	―
0R3U		€9.73B	31.11	10.12%	1.09%	―	―
0O4N		€732.66M	11.57	12.40%	5.20%	―	―
0RBK		€3.93B	21.23	-19.48%	6.00%	―	―
KBX	71 Outperform	€14.36B	33.69	13.95%	1.96%	-1.57%	-26.71%

* Consumer Cyclical Sector Average

Performance Comparison

DE:CON

Continental Aktiengesellschaft

76.12

16.38

27.41%

GB:0MG5

ElringKlinger

4.37

-1.24

-22.10%

GB:0R3U

Hella KGaA Hueck & Co

88.40

4.93

5.91%

GB:0O4N

SAF-HOLLAND SE

16.35

0.64

4.07%

GB:0RBK

Schaeffler

4.19

-1.34

-24.23%

DE:KBX

Knorr-Bremse AG

88.90

17.95

25.30%

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.