Valeo (FR) AI Stock Analysis

• Market Cap: €2.39B
• Dividend Yield: 3.66%
• Average Volume (3M): 906.71K
• Price to Earnings (P/E): 14.4
• Beta (1Y): 1.78
• Revenue Growth: -4.16%
• EPS Growth: -48.55%
• Country: FR
• Employees: 106,100
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 0.24
• Shares Outstanding: 245,607,620
• 10 Day Avg. Volume: 890,196
• 30 Day Avg. Volume: 906,708
• PEG Ratio: 0.69
• Price to Book (P/B): 0.87
• Price to Sales (P/S): 0.14
• P/FCF Ratio: 5.44
• 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: €11.83
• Price Target Upside: 20.71% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10
• EPS Forecast (FY): 1.65
• Revenue Forecast (FY): €20.56B

• Rating: 52 Neutral
• Price Target: €11.00 ▲(12.24% Upside)
• Action: Reiterated Date: 03/08/26
• Date: Action: Reiterated 03/08/26

The score is held back primarily by leveraged balance-sheet risk and weakening reported top-line trends alongside very thin net margins, despite solid multi-year cash generation. Technically, the stock is in a clear downtrend (below key moving averages with negative MACD), though it appears oversold. Valuation is a modest offset, with a moderate P/E and a ~3.9% dividend yield.

Positive Factors

Cash generation

Consistent operating cash flow and recurring positive free cash flow provide a durable liquidity buffer. Over 2–6 months this supports funding for R&D and capex for electrification/ADAS, cushions cyclicality in auto demand, and underpins the company’s ability to service obligations while investing strategically.

Margin expansion

Sustained gross margin improvement signals structural gains from better mix, pricing power, and cost efficiency. Higher gross margins increase resilience to cost shocks and provide room to fund incremental SG&A and R&D, helping improve operating profitability over coming quarters and support strategic transitions.

OEM contracts & EV/ADAS exposure

A business model tied to long-term OEM contracts and growing electrification/ADAS secular trends creates durable revenue streams and strategic customer ties. Structural exposure to EV and driver-assistance content supports medium-term demand and R&D partnerships that sustain competitive positioning with major automakers.

Negative Factors

High leverage

Elevated debt relative to equity constrains financial flexibility in a capital-intensive, cyclical auto-parts industry. High leverage increases refinancing and interest-rate risk, reduces ability to fund strategic investments quickly, and magnifies earnings volatility if revenues soften further.

Weakening revenue trend

A multi-year softening top line, including a sharp 2025 drop, undermines operating leverage and the company’s ability to scale higher-margin products. Persistent revenue pressure can compress margins, reduce free cash flow and slow deleveraging, making it harder to execute long-term strategic initiatives.

Very thin net margins

Sub-1% net margins leave limited buffer against cost inflation, commodity swings or cyclical downturns. Thin profitability reduces retained earnings for reinvestment and debt paydown, making durable margin improvement necessary for stronger returns and financial resilience over the medium term.

Valeo Business Overview & Revenue Model

Company Description

Valeo SE designs, produces, and sells components, systems, and services for automakers in France, other European countries, Africa, North America, South America, and Asia. The company operates through four segments: Comfort & Driving Assistance Systems, Powertrain Systems, Thermal Systems, and Visibility Systems. It offers parking and driving assistance products, such as ultrasonic sensors, radars, and cameras to detect obstacles around vehicles; intuitive control products; and a range of connectivity solutions from short-range to long-range connectivity, as well as develops systems that enable the integration of applications, such as car sharing services and remote parking systems. The company also provides powertrain systems, including electric powertrain systems for electric cars; torque converters, dual dry and wet clutches, and actuators that enable the automation of transmissions to reduce fuel consumption and enhance driving comfort; and clean engines for vehicles. In addition, it designs and manufactures systems, modules, and components to optimize thermal management of vehicles and passenger comfort in the cabin, including heating ventilation and air conditioning systems. Further, the company designs and produces lighting and wiper systems for drivers in various weather conditions. Additionally, it offers original equipment spares to auto manufacturers; and replacement parts and accessories to independent aftermarket for passenger cars and commercial vehicles. The company was incorporated in 1923 and is headquartered in Paris, France.

How the Company Makes Money

Valeo generates revenue primarily through the sale of automotive components and systems to car manufacturers and aftermarket services. Their business model includes long-term contracts with major automotive OEMs (Original Equipment Manufacturers), which provide a steady stream of income. Key revenue streams come from the sale of products related to the electrification of vehicles, thermal management, visibility systems, and advanced driving assistance technologies. Additionally, Valeo benefits from partnerships with leading car manufacturers and collaborations in research and development, particularly in the growing sectors of electric vehicles and autonomous driving technologies, which contribute to its financial growth and market presence.

Valeo Financial Statement Overview

Summary

Cash flow is a relative strength (consistently positive operating cash flow and positive free cash flow), and profitability has improved materially versus 2020 with expanding gross margin. Offsetting this, net margins remain very thin, the latest periods show weakening revenue (including a steep 2025 decline in the provided data), and the balance sheet appears meaningfully leveraged based on the 2021–2024 pattern (with 2025 leverage fields not reliable in the dataset).

Income Statement

Profitability has improved materially versus 2020 (when the company posted losses), and gross margin has steadily expanded from ~9% (2020) to ~20% (2025 annual). However, recent growth has softened: revenue declined ~2.5% in 2024 and shows a very large reported drop in 2025 (as provided), while net profit margins remain thin (sub-1% to ~1%) and operating profitability is modest (mid-single-digit operating margin in 2025). Overall: better margins than the past, but earnings quality remains sensitive given low net margins and weakening top-line trend in the latest period.

Balance Sheet

Leverage is the main constraint. In 2021–2024, debt sits well above equity (debt-to-equity roughly ~1.6–2.0x), which limits financial flexibility in a cyclical auto-parts environment. Equity is positive and fairly stable (~€3.3–€3.8B), and returns on equity are positive in 2021–2024 (~4%–6%), but not high enough to offset the risk implied by elevated leverage. The 2025 annual debt figure provided is dramatically lower than prior years, but because the related leverage ratios are shown as 0.0 in the dataset, the latest-year balance-sheet improvement is difficult to rely on for scoring; based on the multi-year pattern, the balance sheet still reads as leveraged.

Cash Flow

Cash generation is a relative strength: operating cash flow has been consistently positive and robust (roughly €1.6B–€2.7B across 2020–2025 annual), supporting the business through cycles. Free cash flow is also consistently positive (roughly €0.25B–€0.53B), though it is volatile—flat in 2024 versus 2023 and down sharply in 2025 (as provided). Coverage-style fields are reported as 0.0 in 2025, but the combination of positive operating cash flow and positive free cash flow still suggests decent cash conversion overall, with the key weakness being the variability and the latest-period decline in free cash flow.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	20.90B	21.49B	22.04B	20.04B	17.26B
Gross Profit	4.23B	4.08B	3.95B	2.58B	2.29B
EBITDA	977.00M	2.63B	2.66B	2.35B	2.36B
Net Income	200.00M	162.00M	221.00M	230.00M	175.00M
Balance Sheet
Total Assets	20.27B	21.66B	21.76B	22.03B	18.84B
Cash, Cash Equivalents and Short-Term Investments	2.48B	3.15B	3.14B	3.41B	2.48B
Total Debt	645.00M	7.04B	7.07B	7.28B	5.83B
Total Liabilities	16.20B	17.14B	17.40B	17.30B	14.24B
Stockholders Equity	3.32B	3.72B	3.58B	3.82B	3.69B
Cash Flow
Free Cash Flow	528.00M	463.00M	461.00M	319.00M	249.00M
Operating Cash Flow	2.29B	2.69B	2.46B	1.81B	1.60B
Investing Cash Flow	-1.57B	-1.95B	-1.91B	-1.93B	-1.57B
Financing Cash Flow	-1.16B	-524.00M	-788.00M	962.00M	-613.00M

Valeo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 9.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:FR, the sentiment is Negative. The current price of 9.8 is below the 20-day moving average (MA) of 11.16, below the 50-day MA of 11.96, and below the 200-day MA of 10.96, indicating a bearish trend. The MACD of -0.65 indicates Positive momentum. The RSI at 29.80 is Positive, neither overbought nor oversold. The STOCH value of 14.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:FR.

Valeo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ML	72 Outperform	€19.56B	11.99	8.49%	4.95%	-3.62%	-17.91%
OPM	66 Neutral	€1.99B	12.33	8.94%	3.86%	-0.29%	-1.66%
AKW	65 Neutral	€191.61M	3.48	2.94%	7.43%	-8.58%	-52.26%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
FII	60 Neutral	€2.25B	17.35	13.55%	0.74%	9.17%	12.78%
FR	52 Neutral	€2.39B	14.37	3.67%	3.66%	-4.16%	-48.55%
FRVIA	46 Neutral	€1.77B	-10.74	-11.30%	3.79%	-0.90%	-324.34%