Troubled auto maker Peugeot (PUGOY, Financial) has had many problems over the last few years. A share offering pretty much killed the stock price, but the company seems to be doing better.
Shares trade at 13.19 euros ($14.36), there are 857.86 million shares, and the market cap is 11.315 billion euros. Earnings per share were 1.04 euros last year and the stock trades at a price to earnings ratio of 12.68. The stock does not pay a dividend. Sales shrank from 58.51 billion euros in 2011 to 54.68 billion euros in 2015.
The stock trades at a price to sales ratio of 0.21 and price to book ratio of 0.9. The return on equity is 9.07%, which is pretty good. Unfortunately, that number has been all over the place over the last few years. The operating margin is 5.84%, no great shakes. One highlight is that free cash flow was 9.07 billion euros last year.
Peugeot got itself into trouble in 2013. Since then, it was laid off over 17,000 employees. It recently laid off over 2,000 workers.
France, the Peugeot family and Donfeng of China each own 14% of shares. This was as a result of a rights offering in 2013 to bail the auto maker out. The Peugeot family saw its share of the company drop from 25% to 14%. According to Morningstar, shares outstanding grew from 222 million in 2011 to 857 million. That’s about the worst dilution I’ve ever seen. I can’t believe France bailed out Peugeot.
For the first six months, sales fell 0.2% by volume. Revenues were up 7.4% in Europe but got hammered in emerging markets and Asia. Profit was up to 1.212 billion euros. The balance sheet showed: 11.344 billion euros in cash, 1.57 billion euros in trade receivables, 1.937 billion euros in other receivables and 274 million euros in loans. The liability side showed 9.756 billion euros in trade payables and 4.897 billion euros in non-current liabilities. To be quite honest, I read thousands of filings and I don’t like Peugeot’s reports. They’re hard to read and different from what I’m used to seeing.
The company’s three models are Peugeot, Citroen and DS. Most cars are on the small side. This makes sense as gasoline is expensive in Europe and the streets are often smaller than here in the U.S. I’d liken most of the auto maker’s cars to smaller Hondas and Toyotas. The 208 is a mini that is coming out with an all-electric motor. The 3008 is a new SUV that is getting good reviews from auto magazines. It retails between 21,100 euros and 25,360 euros. That’s about what small SUVs retail for the in the U.S. I was surprised to see that the company makes some pretty cool looking sports cars. The 3008 and 5008 are slick. The Traveller is a big, boxy mini-van.
The company plans on re-entering the U.S. and North American markets. At first, Peugeot will offer car sharing services. Then, it will begin selling autos. The first car sharing service is in Quebec. I’m sure the French Canadians will give Peugeot a shot. The company has a ten year plan and will start the car sharing in 2017. I was also surprised to see that Peugeot is big in Iran. The company has a goal to sell 150,000 cars there.
I am not going to buy shares. I am curious to see how the auto maker does upon its entry into the U.S. On my first trip to Paris, I was always impressed by how sleek Peugeot’s look. It is an interesting stock to follow.
Disclosure: We do not own shares.
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