After Spin-Off, What’s Next For Daimler AG Stock?

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[Updated 12/30/2021] daimler ag update

Daimler AG stock (OTCMKTS:DDAIF) has dropped from $97 in early December to $80 currently. The decline is primarily due to the spin-off of Daimler’s commercial vehicle business and the subsequent listing of Daimler Truck Holding AG 0 December 10 on the Frankfurt Stock Exchange. Daimler AG will be rebranded as Mercedes-Benz Group AG with effect from 1 February 2022 to emphasize the future focus on cars and vans of the Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ brands.

Overall, we expect Daimler AG’s Revenue Expected to be €125.5 billion ($151.8 billion) in 2021. Revenue is expected to grow further to €128.9 billion ($156 billion) in 2022 and net income is expected to be €4 billion ($4.9 billion). This will take the EPS figure for fiscal year 2022 to €3.78 ($4.57), coupled with a P/E multiplier of 19.9x and a euro to dollar exchange rate of $1.21 Daimler’s valuation Around $91, which represents an increase of 14%.

Below you’ll find our previous coverage of Daimler AG stock where you can track our view over time.

[Updated 09/14/2021] Daimler AG’s stock rally will continue

Daimler’s stock (OTCMKTS:DDAIF) is up 20% from the end of 2020 to currently $85. The stock has been rising since the start of the year as the company continues its post-pandemic recovery. In the recently ended Q2 2021, Daimler saw revenue growth of 54%, reaching $52.4 billion, while reporting earnings of $4.05 compared to $2.11 in the same period last year. The stock price declined slightly around June as the sector is going through semiconductor chip shortages, affecting companies’ production. At the recently held Munich Motor Show, Daimler CEO, Ola Kalenius mentioned that the third quarter is expected to be most affected by the reduction in the fourth quarter before recovery. We believe this is already included in the price and the company expects to continue to grow revenue and earnings going forward.

Overall, we expect Daimler AG’s revenue to grow 4.6% to €162.3 billion ($196 billion) in 2021. Revenue is expected to grow further to €168 billion ($203 billion) in 2022 and net income is expected to be €5.6 billion. ($6.8 billion). This would take the EPS figure for fiscal year 2022 to €5.24 ($6.34), which combined with a P/E multiplier of 15.7x and a euro-to-dollar exchange rate of $1.21 would take Daimler’s valuation to around $99, meaning 17% increase.

[Updated 01/25/2022] Daimler AG stock likely up 10%

We believe that Daimler’s stock (OTCMKTS:DDAIF) is up 10% even as fears around the pandemic subside. DDAIF is currently trading at around $72. It has surpassed its pre-Covid level. DDAIF stock is up 32% from the pre-Covid price of $54 seen in January 2020, after the Fed’s announcement of the multi-billion dollar stimulus package on March 23, which lifted market sentiments. The share price rose as the lockdown in the sectors created positivity for the sector. Despite the rally in DDAIF stock since late March, we believe the stock has room for more growth as fears surrounding the pandemic subside, with vaccines progressing across countries.

2020 coronavirus crisis

2020 crisis timeline so far:

  • 12/12/2019: First cases of corona virus were reported in China
  • 1/31/2020: WHO declares a global health emergency.
  • 2/19/2020: Signs of effective containment in China and hopes of monetary easing by major central banks help S&P 500 reach record high
  • 3/23/2020: S&P 500 34% falls From the peak level seen on February 19, as Covid-19 cases rise rapidly outside China. Doesn’t help oil prices slump in mid-March amid Saudi-led price war
  • From 3/24/2020: S&P 500 72% recovery From the lows seen on March 23, as the Fed’s multi-billion dollar stimulus package quells near-term survival concerns and boosts liquidity in the system.

Conversely, here’s how the DDAIF and the broader market performed during the 2007/2008 crisis.

2007-08 Crisis Timeline

  • 10/1/2007: Predicted pre-crisis peak in S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
  • 3/1/2009: Lower levels predicted by the S&P 500 Index
  • 12/31/2009: Preliminary correction to levels before a quick decline (around 9/1/2008)

Daimler AG vs. S&P 500 Performance Over the 2007-08 Financial Crisis

DDAIF stock fell from a level of about $103 in September 2007 (the pre-crisis peak) to a level of about $23 in March 2009 (as the market sank), meaning that DDAIF stock remained at its pre-crisis level. Nearly 78% fell from the peak. It returned to the level of around $53 in early 2010, after the 2008 crisis, an increase of 136% between March 2009 and January 2010. In comparison, the S&P 500 index fell 51% for the first time in a bearish wake and recovered 48% by January. 2010.

Daimler AG Fundamentals in recent years

Daimler AG’s revenue grew 13% from $169.6 billion in 2016 to $192 billion in 2019, primarily due to increased volumes and pricing. Despite the increase in revenue, the company’s margin fell from 5.6% to 1.4%, resulting in 72% EPS falling from $8.82 in 2016 to $2.47 in 2019. The company’s Q3 2020 revenue was up 0.8% from the level seen a year ago, and the EPS figure for the quarter rose to $2.26 from $1.75 in the same period a year ago.

Does Daimler AG have enough cash to meet its obligations in the coronavirus crisis?

Daimler AG’s total debt increased from $1.9 billion in 2017 to $20.6 billion at the end of the third quarter of 2020, while its total cash increased from $9.7 billion to $29.8 billion in the same period. The company received $10 billion in cash from its operations in the first nine months of 2020. This shows that the company has enough cash to meet its obligations.

Conclusion

Stages of the Covid-19 crisis:

  • Early- to mid-March 2020: Fear turns into a rapidly spreading coronavirus outbreak RealityWith the number of cases increasing rapidly globally
  • From the end of March 2020 onwards: Social distancing measures + lockdown
  • April 2020: Fed stimulus Suppresses near-term survival anxiety
  • May-June 2020: demand recoveryWith the gradual lifting of the lockdown – there is no panic now despite the steady rise in the number of cases
  • Since the end of 2020: Weak quarterly results, but continued improvement in demand and progress, with buoyant market sentiment in vaccine development

Given the historical performance of Daimler AG’s stock, we believe there is room for further growth in the stock in the near future.

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