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Compagnie Générale des Établissements Michelin (FR:ML)
:ML
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Compagnie Générale des Établissements Michelin
(ML)
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Rating:72Outperform
Price Target:
€38.00
▲(12.56% Upside)
Action:UpgradedDate:02/18/26
The score is driven primarily by solid financials (profitable business, manageable leverage, and healthy free cash flow) tempered by 2025 margin/profitability compression. Valuation is supportive with a moderate P/E and a strong dividend yield. Technicals are positive overall but appear overbought, which slightly reduces the score due to elevated near-term pullback risk.
Positive Factors
Global market leadership
Michelin's long-standing global leadership and strong brand create durable competitive moats: deep OEM relationships, geographic scale, and reputational advantages. These bolster pricing power and market access across passenger, commercial, aviation and specialty segments over the medium term.
Diversified revenue streams & services
A broad product mix (passenger, truck, specialty) plus mobility services and fleet partnerships reduces dependence on any single end-market. Services and management solutions add recurring revenue and deepen customer lock-in, supporting steadier revenue over economic cycles.
Healthy balance sheet and improving leverage
Manageable debt metrics (historical debt/equity ~0.35–0.53) and a large equity base provide financial flexibility for capex, R&D and dividends. Improving leverage enhances resilience to cyclical demand shifts and supports long-term investment and strategic initiatives.
Negative Factors
2025 margin and profitability compression
The 2025 drop in net income and stepped-down operating/EBITDA margins signal margin pressure that may persist from input costs, pricing mix, or competitive intensity. Sustained margin compression would erode cash available for reinvestment, dividends and R&D, weakening long-term returns.
Choppy revenue trend and negative recent growth
A negative multi-year revenue growth rate and choppy sales since 2023 reduce visibility on demand stability. In cyclical industries like tires, inconsistent top-line trends make planning capex and capacity utilization harder, increasing execution risk over the medium term.
Volatile cash-flow conversion and visibility gaps
Though FCF remained positive (~€2.07B in 2024; ~€1.79B in 2025), variability in cash conversion and missing 2025 coverage metrics reduce confidence in sustained cash generation. Persistent volatility complicates budgeting for dividends, buybacks, and cyclical investments.
Compagnie Générale des Établissements Michelin (ML) vs. iShares MSCI France ETF (EWQ)
Market Cap
$23.09B
Dividend Yield4.95%
Average Volume (3M)1.96M
Price to Earnings (P/E)14.2
Beta (1Y)0.69
Revenue Growth-3.62%
EPS Growth-17.91%
CountryFR
Employees118,400
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.20
Shares Outstanding687,597,500
10 Day Avg. Volume2,005,179
30 Day Avg. Volume1,957,538
Financial Highlights & Ratios
PEG Ratio-1.10
Price to Book (P/B)1.10
Price to Sales (P/S)0.77
P/FCF Ratio11.15
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue1.06
Enterprise Value/Gross Profit3.91
Enterprise Value/Ebitda5.90
Forecast
1Y Price Target
$33.62Price Target Upside-0.40% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering8
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Compagnie Générale des Établissements Michelin Business Overview & Revenue Model
Company DescriptionCompagnie Générale des Établissements Michelin Société en commandite par actions manufactures and sells tires worldwide. The company offers tires for private use covering cars, racing, biking, motorcycles, scooters, and mopeds; and professional use, such as freight and people transport, agriculture, construction and industrial, mining and quarries, corporate fleets, tradesmen and professionals, civil and military operations, light rail, and aircraft. It is also involved in the provision of tire-related services, including development of mobility solutions for fleet managers, vehicle manufacturers, farmers, distributors, and individuals; mobility services, such as road maps, mobile apps, itineraries, and travel guides; lifestyle products comprising car and bike accessories, shoe soles, and sports and leisure gears; and high-tech materials that include 3D metal printing, specialty, rubber, biosourced, and recycled materials. Compagnie Générale des Établissements Michelin Société en commandite par actions was incorporated in 1863 and is based in Clermont-Ferrand, France.
How the Company Makes MoneyMichelin generates revenue primarily through the sale of tires across multiple markets. The company has key revenue streams from passenger car tires, commercial vehicle tires, and specialty tires for sectors like aviation and agriculture. Additionally, Michelin's revenue is bolstered by its services and solutions, including tire repairs, management services, and mobility solutions that enhance customer experience. Strategic partnerships with automotive manufacturers and fleets also contribute to its earnings, as Michelin often provides original equipment tires for new vehicles. Furthermore, the company invests in research and development to innovate and improve tire performance, which helps maintain its competitive edge and attract customers.
Compagnie Générale des Établissements Michelin Earnings Call Summary
Earnings Call Date:Jul 24, 2024
(Q2-2024)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong operating income, cash flow, and improvements in safety and environmental metrics. However, challenges were noted with sales declines due to currency effects, market distortions from budget tire inflows, and a negative impact from price indexation clauses. Despite these challenges, the company maintained its guidance and showed resilience in its operational performance.Q2-2024 Updates
Positive Updates
Strong Operating Income and Cash Flow
Segment operating income reached 13.2% of sales in H1, an increase from 12.1% in H1 2023. Strong cash flow generation before acquisition of EUR 669 million was achieved.
Improved Safety and Gender Diversity
The group's safety performance improved with a total case incident rate at 1, and the percentage of women in managerial positions increased to 30.6%.
CO2 Emissions and Water Withdrawal Reduction
Reduction of CO2 emissions by 7.2% and water withdrawal by 6.3% compared to the first semester of 2023.
Margin Recovery in Road Transportation
The segment showed strong margin recovery from 5% to 9.2%, benefiting from a targeted market approach and growing contribution from Connected Solutions.
Strong Mix Improvement
A strong 1.9% mix improvement offset the negative price effect from indexation clauses.
Positive Debt Ratings
Moody's upgraded Michelin's long-term debt from A3 to A2, and Scope rated it as A.
Negative Updates
Sales Decline Due to Currency Effects
Sales ended at EUR 13.5 billion, down 3.1% excluding the currency effect.
Market Distortions from Budget Tire Inflows
The tire market was distorted by high inflows of budget tires, particularly affecting passenger car and truck replacement markets.
Negative Impact of Price Indexation Clauses
A negative price effect of 0.8% was attributed to indexation clauses, impacting the automotive segment despite a strong mix.
Reduced Original Equipment Markets
OE markets saw a sharp decline, particularly in Europe with a 5% decrease, and North America with a 9% decrease for original equipment truck tires.
Challenges in Specialty Segment
The specialty segment faced adverse contexts from weak OE, particularly in agricultural and construction sectors, leading to a 7.2% volume decline.
Company Guidance
In the second quarter 2024 earnings call for Michelin (ML.PA), management provided guidance highlighting a strong operational performance despite a challenging market environment. The company reported a segment operating income of 13.2% of sales for the first half, up from 12.1% in the same period last year, and a robust cash flow generation of EUR 669 million before acquisitions. Sales reached EUR 13.5 billion, a decline of 3.1% excluding currency effects, with a mix improvement of 1.9% offsetting negative pricing due to indexation clauses. The guidance for 2024 remains unchanged, with expectations for segment operating income to exceed EUR 3.5 billion at constant exchange rates and free cash flow to surpass EUR 1.5 billion before acquisitions. Michelin also emphasized continued progress in strategic areas, such as increasing the number of women in managerial positions to 30.6% and reducing CO2 emissions by 7.2% compared to the first half of 2023.Compagnie Générale des Établissements Michelin Financial Statement Overview
Summary
Overall fundamentals are solid: Income Statement (70) shows a strong 2025 revenue rebound but weaker profitability and margin compression; Balance Sheet (76) indicates manageable, improving leverage and a sizeable equity base; Cash Flow (74) reflects generally healthy free cash flow with some volatility and less visibility on 2025 coverage/conversion metrics.Income Statement
Revenue rebounded strongly in 2025 (up ~28.5%), but profitability weakened versus prior years: net income fell to ~€1.24B from ~€1.88B in 2024 and ~€2.00B in 2022–2023, and operating/EBITDA margins also stepped down from 2021–2024 levels. Overall, the business remains solidly profitable with mid-to-high single-digit net margins in most years, but the 2025 margin compression and choppy revenue trend since 2023 temper the score.70
Positive
Balance Sheet
Leverage looks manageable and improving over time, with debt down versus 2020–2021 and a sizeable equity base (~€18.1B in 2025). Debt relative to equity was moderate in 2021–2024 (roughly ~0.35–0.53), supporting financial flexibility. Returns on equity were healthy in 2021–2024 (about ~10–12%), though 2025 return metrics are not available in the dataset, limiting visibility into the latest-year efficiency.76
Positive
Cash Flow
Cash generation is generally strong, with positive free cash flow in most years and a sharp recovery after a weak 2022 (when free cash flow turned negative). Operating cash flow and free cash flow stepped down from the 2023 peak but remained solid in 2024–2025 (free cash flow ~€2.07B in 2024 and ~€1.79B in 2025). Still, cash flow conversion has been volatile across the cycle, and key coverage/conversion metrics for 2025 are not provided, which adds some uncertainty.74
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 25.99B | 27.19B | 28.34B | 28.59B | 23.80B |
| Gross Profit | 7.02B | 7.75B | 7.95B | 7.46B | 6.91B |
| EBITDA | 4.65B | 4.39B | 4.88B | 4.90B | 4.54B |
| Net Income | 1.67B | 1.88B | 1.98B | 2.00B | 1.84B |
Balance Sheet | |||||
| Total Assets | 35.02B | 37.35B | 35.20B | 35.35B | 34.54B |
| Cash, Cash Equivalents and Short-Term Investments | 3.97B | 4.03B | 2.80B | 2.58B | 4.48B |
| Total Debt | 6.61B | 7.37B | 6.24B | 7.45B | 8.00B |
| Total Liabilities | 16.94B | 18.72B | 17.24B | 18.23B | 19.57B |
| Stockholders Equity | 18.07B | 18.63B | 17.95B | 17.11B | 14.97B |
Cash Flow | |||||
| Free Cash Flow | 1.79B | 2.07B | 3.05B | -210.00M | 1.20B |
| Operating Cash Flow | 3.82B | 4.34B | 5.29B | 1.93B | 2.91B |
| Investing Cash Flow | -1.61B | -2.11B | -2.93B | -1.95B | -1.75B |
| Financing Cash Flow | -2.25B | -794.00M | -2.34B | -1.86B | -1.43B |
Compagnie Générale des Établissements Michelin Technical Analysis
Positive
33.76
Price Trends
30.62
Positive
29.46
Positive
30.67
Positive
Market Momentum
0.93
Positive
66.09
Neutral
59.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:ML, the sentiment is Positive. The current price of 33.76 is above the 20-day moving average (MA) of 32.81, above the 50-day MA of 30.62, and above the 200-day MA of 30.67, indicating a bullish trend. The MACD of 0.93 indicates Positive momentum. The RSI at 66.09 is Neutral, neither overbought nor oversold. The STOCH value of 59.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:ML.
Compagnie Générale des Établissements Michelin Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | €2.86B | 45.55 | 6.49% | 0.74% | 9.17% | 12.78% | |
72 Outperform | $23.09B | 14.23 | 8.49% | 4.95% | -3.62% | -17.91% | |
67 Neutral | €2.45B | 15.40 | 7.91% | 3.86% | -0.29% | -1.66% | |
65 Neutral | €207.53M | 11.83 | 2.91% | 7.43% | -8.58% | -52.26% | |
63 Neutral | €2.87B | -6.02 | -11.30% | 3.79% | -0.90% | -324.34% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | €3.25B | 25.96 | 3.67% | 3.66% | -4.16% | -48.55% |
* Consumer Cyclical Sector Average
FR:ML
Compagnie Générale des Établissements Michelin
33.76
2.02
6.37%
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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.