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About the company
Groupe Renault is a French multinational automobile manufacturer established in 1899. The company produces a range of cars and vans, and in the past has manufactured trucks, tractors, tanks, buses/coaches and autorail vehicles.
Investment Thesis
We maintain our price target of €100 on Renault. On 6th October 2017 Renault launched a new strategic plan for 2017-2022 with an ambition to reach €70 billion (at constant exchange rates) in revenues and 7% operating margin at the end of the plan, while maintaining a positive operational automotive free cash flow every year.
We expect the improvement in valuation to come from:
Headwinds
Tailwinds
Rationale for our Overweight Recommendation
We are overweight on Renault with a price target of €100 per share for the following reasons:
Outlook
Renault should be a satellite in a portfolio. Margins, cashflow and profitability are expected to continue increasing in the coming years. Renault should be added to a well-diversified portfolio.
Next Reporting Date
Q317 Sales and Revenue release on 24th October 2017
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