Stellantis NV (NYSE: STLA), a multi-brand owner, might be a good long-term investment if it can keep up with current trends. The stock has a low capitalization-to-earnings ratio, and the firm is ready to return up to 30% of its free cash flow to shareholders.
Stellantis was founded in 2021 when Fiat Chrysler and PSA Group merged. Jeep, Dodge, Ram, Peugeot, Opel, Fiat, and Maserati are among the automotive brands owned by the business. In terms of sales, the merged firm is the world’s fourth-largest automaker.
The current outlook for the automobile market is cautious, as macroeconomic conditions have a large impact on manufacturing and subsequent sales. As a result, Stellantis stock is among the industry’s lowest in terms of current price and predicted earnings. At the same time, revenues climbed by more than 13.5% year over year in fiscal 2021.
Sales increased by 12% year over year in the first quarter of the fiscal year 2022. Despite decreased total shipments owing to semiconductor shortages, the corporation was able to compensate for lower manufacturing volumes by raising pricing.
Stellantis plans to boost sales of electric vehicles in the future. Electric cars are expected to account for 100% of sales in Europe and 50% of sales in North America by 2030, according to management. The business claims that by 2030, it will have 25 new all-electric vehicles in the US, with the Jeep SUV set to debut in 2023, followed by many other EVs.
Stellantis has a strong balance sheet and lots of cash, and management plans to use around 25-30% of free cash flow to pay dividends (the company intends to pay annual rather than quarterly dividends). The stock is currently yielding 7.5 percent. Stellantis is also returning cash to shareholders through share buybacks, with intentions to purchase back up to 5% of the company’s outstanding shares by 2025.
STLA’s high price in the 52 weeks ending today was $21.99, which is 32.7 percent more than the stock’s current price. STLA’s current price, meanwhile, is up 13.32 percent from its 52-week low of $13.06.