PLLIF - Pirelli: Tire Giant Trading At A 10% Free Cash Flow Yield

2024-07-06 10:30:00 ET

Summary

• Pirelli's revenue remained flat in 2023, but lower operating costs led to increased profits and free cash flows.
• The company's guidance for 2025 includes a revenue increase and margin expansion, making the current share price attractive with a 10% free cash flow yield.
• Pirelli's stock is priced attractively at 4.5 times the adjusted EBITDA in 2025, indicating a good investment opportunity.

Introduction

Pirelli ( OTCPK:PLLIF ) is a large Italian tire manufacturer and recently enjoyed increased brand recognition as it is the sole tire supplier to the Formula 1 teams . Although the company's revenue has remained relatively flattish in 2023, and although we shouldn't expect any revenue growth in 2024 either, the lower operating costs still result in increasing profits and free cash flows. The company also recently published its guidance for 2025, and that's a good reason to have another look under the hood to see if I need to fine-tune my expectations....

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