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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:
€32.00
▲(12.48% 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
Balance sheet strength
Michelin's improving leverage and ~€18.1B equity base provide durable financial flexibility. Lower relative debt versus prior years supports capital allocation for capex, R&D and dividend policy, and gives resilience through automotive cycles and commodity shocks over the next 2–6 months.
Free cash flow generation
Sustained multi-year positive free cash flow (~€2.07B in 2024; ~€1.79B in 2025) underpins shareholder returns and reinvestment capacity. Consistent FCF provides a buffer to fund fleet solutions, product development and dividends even if margins are pressured in the near term.
Diversified, premium business model
Michelin's global footprint, premium brand and mix of OEM, replacement and services create multiple durable revenue streams. Brand strength aids pricing power in premium segments while fleet solutions and services increase recurring revenue and reduce sole dependence on tire unit cycles.
Negative Factors
Margin and profitability compression
The meaningful drop in net income and stepped-down margins signal structural pressure on profitability. If input costs, mix shifts or pricing dynamics persist, sustained margin compression could erode free cash flow and returns, constraining long-term investment and dividend capacity.
Revenue volatility and choppy trends
Negative recent revenue growth and a choppy trend since 2023 indicate demand and OEM exposure volatility. This reduces visibility into medium-term top-line trajectory and complicates capacity planning, pricing strategies and margin recovery over the coming quarters.
Volatile cash conversion and metric visibility
Intermittent cash conversion weakens predictability of free cash flow sustainability. Missing detailed 2025 coverage metrics increases uncertainty for debt servicing, dividend coverage and reinvestment planning, making capital allocation decisions riskier over the medium term.
Compagnie Générale des Établissements Michelin (ML) vs. iShares MSCI France ETF (EWQ)
Market Cap
€19.56B
Dividend Yield4.95%
Average Volume (3M)1.96M
Price to Earnings (P/E)12.0
Beta (1Y)0.76
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 CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
€35.27Price Target Upside23.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)2.86
Revenue Forecast (FY)€26.52B
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 primarily makes money by selling tires and related products to two main customer channels: (1) original equipment manufacturers (OEMs) that fit tires on new vehicles, and (2) the replacement market, where consumers, fleets, and distributors buy tires to replace worn ones. Revenue is generated across multiple tire categories—passenger car, light truck, truck/bus, two-wheel, and specialty tires (e.g., agricultural, construction, mining, aviation)—with pricing and margins influenced by brand positioning, product mix (e.g., premium vs. mid-range), volumes, and raw-material/input costs. In addition to tire sales, Michelin earns revenue from services and solutions tied to mobility and fleet efficiency, which can include offerings such as tire-related services, performance/maintenance support, and digital or operational solutions for professional customers (specific product-level details vary by market and are not exhaustively available here). Michelin also monetizes its lifestyle and experience activities (notably the Michelin Guide) through commercial arrangements such as partnerships, licensing, and related publishing/digital activities; however, the exact contribution of these streams is not provided here and is therefore null.
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
Negative
28.45
Price Trends
31.67
Negative
29.96
Negative
30.48
Negative
Market Momentum
-0.92
Positive
29.33
Positive
8.46
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:ML, the sentiment is Negative. The current price of 28.45 is below the 20-day moving average (MA) of 31.38, below the 50-day MA of 31.67, and below the 200-day MA of 30.48, indicating a bearish trend. The MACD of -0.92 indicates Positive momentum. The RSI at 29.33 is Positive, neither overbought nor oversold. The STOCH value of 8.46 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | €19.56B | 11.99 | 8.49% | 4.95% | -3.62% | -17.91% | |
66 Neutral | €1.99B | 12.33 | 8.94% | 3.86% | -0.29% | -1.66% | |
65 Neutral | €191.61M | 3.48 | 2.94% | 7.43% | -8.58% | -52.26% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | €2.25B | 17.35 | 13.55% | 0.74% | 9.17% | 12.78% | |
52 Neutral | €2.39B | 14.37 | 3.67% | 3.66% | -4.16% | -48.55% | |
46 Neutral | €1.77B | -10.74 | -11.30% | 3.79% | -0.90% | -324.34% |
* Consumer Cyclical Sector Average
FR:ML
Compagnie Générale des Établissements Michelin
28.45
-4.20
-12.87%
FR:FRVIA
Forvia
8.99
0.09
0.97%
FR:FII
Lisi SA
49.45
19.93
67.49%
FR:AKW
AKWEL SA
7.22
0.39
5.76%
FR:OPM
OPmobility
14.00
4.31
44.55%
FR:FR
Valeo
9.80
0.41
4.41%
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.