STLA Craters Today, But Is Still Off 52 Week Low.

Standing out among the Street's worst performers today is Stellantis, a auto manufacturers company whose shares slumped -8.2% to a price of $22.87, 23.64% below its average analyst target price of $29.95.

The average analyst rating for the stock is buy. STLA underperformed the S&P 500 index by -8.0% during today's morning session, but outpaced it by 28.4% over the last year with a return of 52.6%.

Stellantis N.V. engages in the design, engineering, manufacturing, distribution, and sale of automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, mobility services, and production systems worldwide. The company is a consumer cyclical company, whose sales figures depend on discretionary income levels in its consumer base. For this reason, consumer cyclical companies have better sales and stock performance during periods of economic growth, when consumers have more of an incentive to spend their money on non-essential items.

Stellantis's trailing 12 month P/E ratio is 3.6, based on its trailing EPS of $6.35. The company has a forward P/E ratio of 5.6 according to its forward EPS of $4.06 -- which is an estimate of what its earnings will look like in the next quarter. As of the first quarter of 2023, the average Price to Earnings (P/E) ratio for US consumer discretionary companies is 22.96, and the S&P 500 has an average of 15.97. The P/E ratio consists in the stock's share price divided by its earnings per share (EPS), representing how much investors are willing to spend for each dollar of the company's earnings. Earnings are the company's revenues minus the cost of goods sold, overhead, and taxes.

To deepen our understanding of the company's finances, we should study the effect of its depreciation and capital expenditures on the company's bottom line. We can see the effect of these additional factors in Stellantis's free cash flow, which was $22.48 Billion as of its most recent annual report. Over the last 4 years, the company's average free cash flow has been $13.67 Billion and they've been growing at an average rate of 11.5%. With such strong cash flows, the company can not only re-invest in its business, it can afford to offer regular returns to its equity investors in the form of dividends. Over the last 12 months, investors in STLA have received an annualized dividend yield of 6.2% on their capital.

Value investors often analyze stocks through the lens of its Price to Book (P/B) Ratio (its share price divided by its book value). The book value refers to the present value of the company if the company were to sell off all of its assets and pay all of its debts today - a number whose value may differ significantly depending on the accounting method. Stellantis's P/B ratio of 0.85 indicates that the market value of the company is less than the value of its assets -- a potential indicator of an undervalued stock. The average P/B ratio of the Consumer Discretionary sector was 4.24 as of the first quarter of 2023.

Stellantis is likely undervalued at today's prices because it has a Very low P/E ratio, an exceptionally low P/B ratio., and generally positive cash flows with an upwards trend. The stock has strong growth indicators because of its strong operating margins with a unknown rate of growth, and a PEG ratio of less than 1. We hope this preliminary analysis will encourage you to do your own research into STLA's fundamental values -- especially their trends over the last few years, which provide the clearest picture of the company's valuation.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.