Michelin (ENXTPA:ML) valuation: assessing the stock after the $220 million US jury verdict
A US jury has hit Michelin North America, part of Compagnie Générale des Établissements Michelin Société en commandite par actions (ENXTPA:ML), with a $220 million verdict over a fatal tire failure, sharpening investor focus on legal and reputational risk.
The verdict lands after a choppy spell for Michelin, with the latest share price at $28.05 and a year to date share price return of negative 12.81 percent. However, the three year total shareholder return of 22.52 percent shows longer term holders are still ahead, even though recent momentum has clearly been fading.
If this legal setback has you reassessing the auto space, it might be worth scanning other auto manufacturers that could offer a different balance of growth potential and risk.
With a sizeable intrinsic discount, solid long term returns, and fresh legal uncertainty clouding the outlook, is Michelin now trading below its real value, or is the market already pricing in the group’s future growth potential?
Most Popular Narrative: 10.5% Undervalued
With the narrative fair value sitting modestly above the last close, the gap hinges on future earnings power and margin resilience that still divide opinion.
Michelin's technology leadership and ongoing innovation, showcased by new product launches (e.g., CrossClimate 3 and X LINE GRIP D) and top performance in abrasion and energy efficiency, are well-aligned with rising demand for specialized tires for EVs and sustainability-focused vehicle platforms, paving the way for revenue growth and improved pricing power.
Curious how modest revenue growth, thicker margins, and a lower future earnings multiple can still support a higher fair value than today’s price? The full narrative unpacks the recovery path, the earnings bridge, and the valuation math step by step, but keeps one crucial profitability assumption at the heart of the story.
Result: Fair Value of $31.35 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, persistent FX headwinds and intensifying low cost competition could quickly erode margins, challenging both the premium mix thesis and the recovery timeline.
Build Your Own Compagnie Générale des Établissements Michelin Société en commandite par actions Narrative
If you see the story differently or want to test your own assumptions against the numbers, you can build a complete view in just minutes: Do it your way.
A great starting point for your Compagnie Générale des Établissements Michelin Société en commandite par actions research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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