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1. Company Snapshot

1.a. Company Description

Continental Aktiengesellschaft, a technology company, offers intelligent solutions for vehicles, machines, traffic, and transportation worldwide.It operates through four sectors: Automotive, Tires, ContiTech, and Contract Manufacturing.The company offers safety, brake, chassis, motion, and motion control systems; solutions for assisted and automated driving; and audio and camera solutions for the vehicle interior, as well as intelligent information and communication technology solutions.


It also provides tires for cars, trucks, buses, two-wheel and specialist vehicles, bicycles, and motor vehicles, as well as digital tire monitoring and management systems.In addition, the company develops and manufactures cross-material, environmentally friendly, and intelligent products and systems for automotive, railway engineering, mining, agriculture, and other industries, as well as provides contract manufacturing services.It sells its products through 944 company owned tire outlets and approximately 5,200 franchise locations The company was formerly known as Continental-Caoutchouc- und Gutta-Percha Compagnie.


Continental Aktiengesellschaft was founded in 1871 and is headquartered in Hanover, Germany.

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1.b. Last Insights on CON

Continental Aktiengesellschaft faces challenges, including a net loss of €238m despite annual revenue of €39.54b. The company's valuation is mixed, with a projected fair value of €109, indicating potential undervaluation. However, its recent earnings call highlights market challenges. Continental's growth prospects are impacted by tariffs and currency headwinds. Additionally, the company has been added to the Zacks Rank #5 (Strong Sell) List, citing negative factors. Its dividend proposal and debt reduction efforts are notable, but not sufficient to offset concerns.

1.c. Company Highlights

2. Continental AG's 2025 Results: Tire Segment Drives Growth Amidst ContiTech Challenges

Continental AG reported its full-year 2025 results, with sales reaching EUR 19.7 billion, representing an organic growth of 0.8%, and an adjusted EBIT margin of 10.3%. The tire segment was the primary contributor to growth, with organic sales growth of 2.4%, while ContiTech faced challenges, particularly in APAC and North America. Adjusted EBIT reached EUR 2 billion, with a net income of EUR 1.1 billion, and a proposed dividend of EUR 2.70 per share, reflecting a payout ratio of around 40-60%. The actual EPS came out at 0.221, significantly lower than estimates at 1.3.

Publication Date: Mar -05

📋 Highlights
  • Full-Year 2025 EBIT Margin Expansion: Adjusted EBIT margin rose to 10.3%, driven by EUR 2 billion EBIT and EUR 1.1 billion net income, reflecting operational efficiency despite margin pressures in ContiTech.
  • Tire Segment Outperforms: Organic sales growth of 2.4% in tires offset ContiTech's struggles, with price increases against tariffs expected to sustain US market resilience in 2026.
  • ContiTech Strategic Exit: Sale of OE-related ContiTech (OESL) completed in Feb 2026, reducing OEM auto exposure, with remaining business sale bids expected in March 2026.
  • 2026 Guidance Optimistic: Sales projected at EUR 17.3-18.9 billion with 11-12.5% EBIT margin, underpinned by tire segment strength and margin improvements in ContiTech post-restructuring.
  • Raw Material Tailwinds: Mid- to high-double-digit EUR million raw material savings in 2026 (triple-digit annually) expected to bolster profitability amid inflationary pressures.

Segment Performance

The tire business saw pressure in the Americas due to higher inventories and weaker sell-out. However, Continental successfully increased prices against tariffs in 2025 and expects these price increases to stick in the US market. In contrast, ContiTech's margin ex-OESL has been decreasing despite industrial production growth. The company expects improvement, particularly in regions like APAC and China and product lines like American Off-Highway business and distribution.

Outlook and Guidance

In 2026, Continental expects sales of EUR 17.3-18.9 billion, with an adjusted EBIT margin of 11-12.5%, driven by the tire segment. The company forecasts a slight decline in OE production and minor growth in the replacement market. Analysts estimate next year's revenue growth at 3.0%. Continental assumes a mid- to high-double-digit positive raw material impact in its guidance.

Valuation and Dividend

With a P/E Ratio of 54.0 and an EV/EBITDA of 7.05, the market seems to be pricing in significant growth expectations. The Dividend Yield stands at 3.73%, indicating an attractive return for income investors. The company's strategic priorities include successfully completing the transformation, optimizing the organic healthiness of the tire business, and being prepared for inorganic growth opportunities.

Raw Materials and Cost Management

The company expects a mid- to high-double-digit euro million tailwind in Q1, and a triple-digit euro million amount for the full year due to raw material prices. If oil prices remain high, Continental may need to take measures to mitigate costs. The company aims to offset general inflation effects with portfolio measures, similar to 2025, where it kept fixed costs stable.

Strategic Priorities and Future Plans

Continental plans to use ContiTech sale proceeds to improve its balance sheet and let shareholders participate. The exact split between de-gearing, special dividend, and buybacks will depend on the proceeds amount. The company targets growing its UHP tire business, with an assumed global UHP growth rate of 8% CAGR, and gaining market share, particularly in the Americas and Asia.

3. NewsRoom

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New Strong Sell Stocks for March 19th

Mar -19

Source: zacks.com

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Continental AG (CTTAF) Full Year 2025 Earnings Call Highlights: Navigating Challenges with ...

Mar -04

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Germany’s Continental Expects Earnings to Increase This Year

Mar -04

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Automotive Air Suspension Industry Competitive Analysis Report 2025: Company Profiles, Strategic Developments, Mergers, Product Innovations, Revenue Insights, and Future Forecasts

Jan -28

Source:

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Continental (XTRA:CON) Valuation Check As Shares Look Inexpensive On Sales But Still Report A Net Loss

Jan -23

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ETFs Caught in the Crossfire Amid US-Greenland Trade Gambit

Jan -21

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What Makes Continental (CTTAY) a New Buy Stock

Jan -15

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Are Investors Undervaluing Continental Aktiengesellschaft (ETR:CON) By 38%?

Jan -08

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.77%)

6. Segments

Automotive

Expected Growth: 2.8%

Continental AG's 2.8% growth in the automotive segment is driven by increasing demand for advanced driver-assistance systems (ADAS), electrification, and autonomous driving technologies. Additionally, the company's focus on digitalization, connectivity, and software solutions is contributing to growth. Furthermore, the rising trend of vehicle electrification and the need for sustainable mobility solutions are also driving growth in this segment.

Tires

Expected Growth: 2.5%

Continental AG's 2.5% tire growth driven by increasing global vehicle production, rising demand for fuel-efficient and eco-friendly tires, and growing popularity of electric and hybrid vehicles. Additionally, expansion in emerging markets, particularly in Asia, and strategic partnerships with automakers contribute to the growth.

ContiTech

Expected Growth: 3.2%

ContiTech's 3.2% growth driven by increasing demand for fuel-efficient and low-emission vehicles, growing adoption of autonomous driving technologies, and expansion in emerging markets. Additionally, Continental's strategic investments in digitalization, electrification, and sustainability initiatives contribute to ContiTech's growth momentum.

Contract Manufacturing

Expected Growth: 2.9%

Continental Aktiengesellschaft's 2.9% growth in Contract Manufacturing is driven by increasing demand for automotive electronics, rising adoption of electric vehicles, and growing need for outsourcing manufacturing services. Additionally, the company's strategic partnerships, investments in digitalization, and expansion into emerging markets are contributing to its growth momentum.

7. Detailed Products

Tires

Continental's tire division offers a wide range of tires for passenger cars, trucks, buses, motorcycles, and bicycles, as well as specialty tires for agricultural, industrial, and off-the-road applications.

Automotive Systems and Technology

Continental's automotive systems and technology division develops and manufactures advanced driver assistance systems, autonomous driving technologies, and vehicle electronics.

ContiTech

Continental's ContiTech division offers a range of industrial and technical products, including conveyor belts, drive belts, and vibration control systems.

Interior Division

Continental's interior division develops and manufactures interior components and systems, including instrument clusters, infotainment systems, and interior electronics.

Powertrain Division

Continental's powertrain division develops and manufactures powertrain components and systems, including fuel injectors, engine management systems, and transmission control systems.

Chassis and Safety Division

Continental's chassis and safety division develops and manufactures chassis components and systems, including brake systems, suspension systems, and advanced driver assistance systems.

8. Continental Aktiengesellschaft's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Continental Aktiengesellschaft is moderate, as there are alternative products and services available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Continental Aktiengesellschaft is low, as customers have limited options and the company has a strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Continental Aktiengesellschaft is moderate, as the company relies on a few key suppliers, but has some flexibility in its supply chain.

Threat Of New Entrants

The threat of new entrants for Continental Aktiengesellschaft is high, as the automotive industry is attractive and new companies are entering the market.

Intensity Of Rivalry

The intensity of rivalry for Continental Aktiengesellschaft is high, as the automotive industry is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 34.40%
Debt Cost 8.01%
Equity Weight 65.60%
Equity Cost 11.59%
WACC 10.36%
Leverage 52.43%

11. Quality Control: Continental Aktiengesellschaft passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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CIE Automotive

A-Score: 6.1/10

Value: 6.9

Growth: 5.3

Quality: 2.7

Yield: 6.2

Momentum: 7.0

Volatility: 8.3

1-Year Total Return ->

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Autoliv

A-Score: 5.5/10

Value: 5.5

Growth: 5.7

Quality: 5.4

Yield: 6.2

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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HELLA

A-Score: 4.8/10

Value: 3.6

Growth: 5.7

Quality: 4.7

Yield: 2.5

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

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Knorr-Bremse

A-Score: 4.7/10

Value: 2.6

Growth: 3.4

Quality: 5.3

Yield: 3.8

Momentum: 6.5

Volatility: 6.3

1-Year Total Return ->

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Forvia

A-Score: 4.1/10

Value: 9.4

Growth: 3.2

Quality: 1.5

Yield: 1.2

Momentum: 8.0

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Continental

A-Score: 3.9/10

Value: 5.1

Growth: 3.3

Quality: 2.6

Yield: 5.6

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

62.74$

Current Price

62.74$

Potential

-0.00%

Expected Cash-Flows