Compagnie Generale des Etablissements Michelin (MGDDY) AI Stock Analysis

• Market Cap: $25.31B
• Dividend Yield: 4.61%
• Average Volume (3M): 8.34K
• Price to Earnings (P/E): 13.7
• Beta (1Y): 0.35
• Revenue Growth: -3.09%
• EPS Growth: -17.42%
• Country: US
• Employees: 118,400
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 0.71
• Shares Outstanding: 1,375,195,000
• 10 Day Avg. Volume: 25,032
• 30 Day Avg. Volume: 8,344
• PEG Ratio: -0.80
• Price to Book (P/B): 1.10
• Price to Sales (P/S): 0.77
• P/FCF Ratio: 11.12
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 0.98
• Enterprise Value/Gross Profit: 3.63
• Enterprise Value/Ebitda: 5.49
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): 1.68
• Revenue Forecast (FY): $31.26B

• Rating: 72 Outperform
• Price Target: $22.50 ▲(22.88% Upside)
• Action: Upgraded Date: 02/18/26
• Date: Action: Upgraded 02/18/26

The score is driven primarily by solid financial quality (steady profitability and improved leverage) but constrained by limited recent revenue growth and uneven cash conversion. Technicals add support due to a strong uptrend, though overbought readings reduce conviction. Valuation is moderately favorable with a reasonable P/E and a supportive dividend yield.

Positive Factors

Leading global market position and brand

Michelin's status as a leading global tire manufacturer and strong brand provides durable competitive advantages: scale in production and distribution, long-term OEM partnerships, and pricing power in premium segments. This supports resilience across cycles and continued investment in R&D and sustainability initiatives that drive longer-term revenue and margin stability.

Improved leverage and solid capital base

Material deleveraging since 2020 has strengthened financial flexibility: lower debt-to-equity reduces refinancing and solvency risk, enabling sustained capex, dividends, and strategic investments. A sizable equity base (~€18.1B) supports balance-sheet resilience and capacity to absorb cyclical shocks without forcing asset sales or drastic cutbacks to long-term programs.

Consistent profitability and positive cash generation

Stable operating profitability (gross ~27%, EBIT ~10%) combined with positive operating cash flow and meaningful free cash flow provides durable internal funding for capex, R&D and shareholder returns. Even with variability, sustained positive FCF supports strategic initiatives and capital allocation without immediate reliance on external financing.

Negative Factors

Soft recent revenue growth

Declining top-line trends over multiple years signal weak demand or pricing pressure in core markets. Persistent revenue softness constrains organic growth, limits the payoff from R&D and capex, and increases reliance on mix changes or cost cuts to sustain margins, reducing visibility on durable earnings growth over the next 2–6 months and beyond.

Uneven cash conversion and volatile OCF

Inconsistent conversion of profit to cash and historical OCF volatility weaken the reliability of internal funding for investments and dividends. Variability raises the likelihood of cash-driven constraints during downturns, forces more conservative capital allocation, and complicates long-term planning despite positive headline FCF in the latest year.

Margin and return normalization from prior peaks

Erosion from prior peak margins and lower returns on equity indicate structural normalization rather than cyclical outperformance. Sustained margin compression reduces cash available for reinvestment and shareholder returns, and may reflect intensifying competition, higher input costs, or product-mix shifts that limit medium-term profitability upside.

Compagnie Generale des Etablissements Michelin Business Overview & Revenue Model

Company Description

Compagnie 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 Money

Michelin generates revenue through multiple key streams, primarily by selling tires to both consumer and commercial markets. The company benefits significantly from its extensive product range, which includes premium tire offerings that command higher prices due to their quality and performance. Additionally, Michelin has established long-term partnerships with automotive manufacturers and distributors, which facilitate a steady demand for its products. The company also derives income from value-added services such as tire maintenance, retreading, and fleet management solutions. Furthermore, Michelin invests in innovation and sustainable practices, which not only enhances its brand reputation but also opens up new revenue opportunities in the growing market for eco-friendly and high-efficiency tires.

Compagnie Generale des Etablissements Michelin Financial Statement Overview

Summary

Fundamentals are solid but not strong-growth: profitability is steady (gross margin ~27%, EBIT margin ~10%) and leverage is manageable (debt-to-equity ~0.37). Offsets include soft recent revenue trends (down ~2.8% in 2025 vs. 2024), some margin/return normalization, and uneven cash conversion (FCF ~0.47x net income) with historical volatility.

Income Statement

Revenue has been soft recently (down ~2.8% in 2025 vs. 2024 and modestly negative in 2023–2024), pointing to a slower top-line environment. Profitability remains solid and fairly steady for the industry, with gross margin ~27% and EBIT margin ~10% in 2025, but margins have eased versus 2021–2022 and net margin has drifted down to ~6.4%. Net income remains healthy (~€1.7B in 2025), but the overall trend shows stable earnings power with limited growth momentum.

Balance Sheet

Leverage looks manageable and has generally improved versus 2020–2021: debt-to-equity is ~0.37 in 2025 (down from ~0.69 in 2020 and ~0.52 in 2021). Equity is sizable (~€18.1B) against total assets (~€35.0B), providing a solid capital base. Returns on equity are respectable (~9.2% in 2025) but have come down from the stronger 2021–2022 levels, suggesting profitability has normalized even as balance sheet risk has improved.

Cash Flow

Cash generation is positive, with operating cash flow of ~€3.8B and free cash flow of ~€1.8B in 2025; free cash flow growth rebounded strongly in 2025 after a dip in 2024. However, cash conversion is not consistently strong: free cash flow is under half of net income in 2025 (~0.47), and operating cash flow has been volatile historically (notably weak in 2022 with negative free cash flow). Overall, cash flow supports the business, but variability and weaker conversion temper the quality of earnings.

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	7.54B	6.99B
EBITDA	4.65B	4.83B	4.88B	4.95B	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	34.70B
Cash, Cash Equivalents and Short-Term Investments	3.97B	4.03B	2.80B	2.87B	4.81B
Total Debt	6.61B	7.37B	6.24B	7.34B	7.82B
Total Liabilities	16.94B	18.72B	17.24B	18.23B	19.73B
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 Generale des Etablissements Michelin Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 18.31
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGDDY, the sentiment is Negative. The current price of 18.31 is below the 20-day moving average (MA) of 19.71, below the 50-day MA of 18.32, and above the 200-day MA of 17.91, indicating a neutral trend. The MACD of 0.31 indicates Positive momentum. The RSI at 38.20 is Neutral, neither overbought nor oversold. The STOCH value of 33.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MGDDY.

Compagnie Generale des Etablissements Michelin Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LEA	72 Outperform	$6.27B	15.17	9.21%	2.63%	-1.90%	-13.86%
VC	72 Outperform	$2.53B	12.96	14.37%	0.57%	-4.03%	-39.51%
MGDDY	72 Outperform	$25.31B	13.75	8.49%	4.61%	-3.09%	-17.42%
ALV	71 Outperform	$8.45B	11.83	30.32%	2.60%	0.84%	26.17%
BWA	62 Neutral	$11.21B	42.28	5.05%	1.24%	0.08%	-83.69%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
GT	48 Neutral	$2.26B	-1.32	-43.08%	―	-3.87%	-482.29%