RNSDF - Renault: Trickiest Of The Automotives Out There But A 'Buy'

2024-07-17 08:48:07 ET

Summary

• With a price target of €66/share, Renault is considered a "BUY" due to its recovery, ownership of successful brands like Dacia, and potential for market outperformance.
• Renault, a French automotive company, has faced financial challenges with a non-investment-grade credit rating and low yield.
• Despite challenges, Renault is undervalued and part of a strong alliance with Nissan and Mitsubishi, showing potential for growth.

Dear readers/followers,

No car company that I follow or invest in has had as tricky a time as Renault (RNLSY). The company, a French somewhat market-leading business in some sectors, has gone through some of the harshest times of any automotive out there for the past few years. Its credit rating has been cut to the bone, and it's one of the only majors with a non-investment-grade credit at BB+. Moody's has also recently updated its rating . It also has an abysmal yield for the sector, and for the valuation, at less than 4% while I have YoCs of over 8% on most of my automotive investments. These are also at higher ratings on an investment grade basis.

However, out of all automotive, none that I know of trades as cheaply as Renault. It's currently at a valuation of below 5x P/E, which makes it on par with some insurance companies. And this is without a doubt interesting in its own right....

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