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1. Company Snapshot

1.a. Company Description

Renault SA designs, manufactures, sells, and distributes vehicles in France and internationally.The company operates through Automotive, AVTOVAZ, Sales Financing, and Mobility Services segments.It offers passenger and light commercial, and electric vehicles primarily under the Renault, Dacia, Renault Samsung Motors, Alpine, LADA, Jinbei & Huaasong, and Eveasy, as well as under the Nissan, Datsun, and Infiniti brands.


The company also sells powertrains and used vehicles, and spare parts; and provides various services, including vehicle sales financing, rental, maintenance, and service contracts.In addition, it offers finance for the purchase on inventories of new and used vehicles, and replacement parts; designs, produces, and sells converted vehicles; Renault EASY CONNECT for Fleet, a connected service for business users; and produces driving aids, such as steering-wheel mounted accelerators and brakes, multifunction remote control units to operate indicators, lights and horns, pedal transfers, etc.; and manual or electric swivel seats.Renault SA was founded in 1898 and is based in Boulogne-Billancourt, France.

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1.b. Last Insights on RNO

Renault's recent performance was negatively impacted by concerns over margin pressure and intense competition. The company's forecast of a 5.5% group operating margin in 2026, down from 6.3% last year, led to a sell-off. Fierce rivalries in passenger cars, particularly from Chinese brands, are expected to persist. Additionally, Renault's CEO departure and a 15% fall in operating profit for last year to $12.8 billion, largely due to a one-off writedown on its stake in Nissan, contributed to the negative sentiment.

1.c. Company Highlights

2. Renault's 2025 Financial Results: A Strong Performance

Renault Group's 2025 financial results showed a strong performance with an operating margin of 6.3%, or EUR 3.6 billion, and a free cash flow of EUR 1.5 billion. The company's revenue grew 3% to EUR 57.9 billion, driven by a 3.2% increase in registrations to 2.3 million units. The actual EPS came out at '1.24' relative to estimates at '4.34', indicating a significant deviation from expectations. The company's valuation metrics, such as a 'P/E Ratio' of -0.84 and a 'P/S Ratio' of 0.16, suggest that the stock may be undervalued.

Publication Date: Feb -22

📋 Highlights
  • Operating Margin & Free Cash Flow:: Achieved 6.3% operating margin (€3.6B) and €1.5B free cash flow in 2025, driven by cost reductions and revenue growth.
  • Revenue & Registrations Growth:: Revenue rose 3% to €57.9B, with registrations up 3.2% to 2.3 million units, supported by all brands’ strong performance.
  • EV Sales Surge:: Renault’s Europe EV sales grew 72%, while hybrids increased 35%, reflecting strong market adoption of electrified vehicles.
  • Cost Efficiency Gains:: Reduced cost of goods sold by €400 per vehicle globally in 2025, targeting €400M annual savings per vehicle in 2026.
  • Net Cash Position & Dividend:: Recorded a record €7.4B net cash position and proposed a €2.20 per share dividend, up from the 20-year average of €1.65.

Revenue Growth Drivers

The revenue growth was driven by strong performances across all brands, including Renault, Dacia, and Alpine. Renault brand EVs in Europe saw a 72% sales growth, while hybrid sales grew 35%. The company achieved a record high automotive net cash position of EUR 7.4 billion. As stated by the company, "the new Trafic van E-Tech will be launched at the end of the year, and the full set of Master versions will be available," indicating a continued focus on product launches.

Cost Reduction and Margin Expansion

Renault achieved a EUR 400 reduction in cost of goods sold per vehicle worldwide in 2025. The company expects to maintain a strong momentum in battery EVs in Europe and a high level of cost reduction activities. The operating margin guidance for 2026 is around 5.5%, with a corridor of 5.3% to 5.7%. The raw material tailwind in 2025 is expected to be an opposite headwind of around double the amount in 2026.

Dividend Policy and Shareholder Returns

The dividend per share is expected to be EUR 2.2 this year, with a progressive increase in absolute value. The company's dividend policy aims to increase in absolute terms, decoupled from earnings. The proposed dividend of EUR 2.20 per share for 2025 will be submitted for approval, representing a 'Dividend Yield (%)' of 6.8%.

Midterm Guidance and Strategic Priorities

Renault's next midterm plan, to be presented on March 10, will be based on four convictions: top priority to products, customer experience, operational excellence, and partnerships. The plan aims to boost competitiveness and strengthen Renault's position in key international markets. The company targets a 5-7% operating margin, with a steady improvement in variable costs and fixed cost discipline.

Valuation and Outlook

The company's valuation metrics, such as a 'P/E Ratio' of -0.84 and a 'P/S Ratio' of 0.16, suggest that the stock may be undervalued. Analysts estimate next year's revenue growth at 2.5%. The company's guidance for 2026 is a 5.5% margin, with a focus on reducing distribution costs and improving residual values. The 'Free Cash Flow Yield (%)' of 11.99% indicates a strong potential for shareholder returns. Renault's 'ROIC (%)' of 33.59% suggests a high return on invested capital, while the 'ROE (%)' of -43.18% indicates a negative return on equity. The 'Net Debt / EBITDA' ratio of 2.19x suggests a manageable debt position.

3. NewsRoom

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Luxury giant Kering to chart path for Gucci turnaround

02:48

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Lucid Receives New Funding From Uber & PIF to Strengthen Capital Base

Apr -15

Source:

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European Connected Services Strategic Profiling of Select OEMs Report 2025-2032: Mercedes-Benz, Hyundai, Kia, BMW, VW, Audi, Skoda, Stellantis, Jeep, Fiat, Citroen, Ford, Honda, Toyota, Renault, Dacia

Apr -15

Source:

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Rivian and Redwood Partner to Launch Energy Storage at Normal Plant

Apr -15

Source:

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RCI BANQUE: ISSUANCE OF EUR 900 MILLION FIXED RATE NOTES MATURING IN FEBRUARY 2030

Apr -14

Source:

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Nissan Unveils Turnaround Plan, Targets 1 Million Annual Sales in US and China

Apr -14

Source:

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What Contributed to 4% Y/Y Drop in Volkswagen's Q1 Deliveries?

Apr -14

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TSLA's FSD Supervised Gets Dutch Approval, Sets Stage for EU Rollout

Apr -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.92%)

6. Segments

Automotive (excluding AVTOVAZ)

Expected Growth: 4%

Renault SA's automotive segment (excluding AVTOVAZ) growth is driven by increasing demand for electric vehicles, expansion in emerging markets, and strategic partnerships. The company's focus on innovative technologies, such as hybrid and plug-in hybrid models, also contributes to growth. Additionally, Renault's efforts to improve operational efficiency and reduce costs support its growth momentum.

Sales Financing

Expected Growth: 3%

Renault SA's 3% sales financing growth driven by increasing demand for electric vehicles, expansion into emerging markets, and strategic partnerships with fintech companies, enhancing customer financing options and experiences. Additionally, Renault's digitalization efforts and investments in data analytics improve risk assessment, allowing for more competitive financing offers.

Mobility Services

Expected Growth: 5%

Renault's Mobility Services growth is driven by increasing urbanization, government regulations promoting eco-friendly transportation, and rising demand for flexible, on-demand mobility solutions. Additionally, investments in digital platforms, partnerships with mobility providers, and expansion into new markets are contributing to the segment's growth.

7. Detailed Products

Passenger Cars

Renault offers a wide range of passenger cars, from city cars to SUVs, sedans, and hatchbacks, designed for comfort, safety, and performance.

Light Commercial Vehicles

Renault provides a variety of light commercial vehicles, including vans, pickups, and trucks, designed for business and professional use.

Electric Vehicles

Renault offers a range of electric vehicles, including city cars, hatchbacks, and SUVs, designed for eco-friendly and sustainable transportation.

Hybrid and Plug-in Hybrid Vehicles

Renault provides a range of hybrid and plug-in hybrid vehicles, combining fuel efficiency and reduced emissions.

Renault Trucks

Renault offers a range of heavy-duty trucks, designed for long-haul transportation, construction, and logistics operations.

Buses and Coaches

Renault provides a range of buses and coaches, designed for public transportation, tourism, and school transportation.

Renault Energy Services

Renault offers a range of energy services, including charging solutions, energy storage, and smart grids.

Renault Software and Services

Renault provides a range of software and services, including connected car services, fleet management, and data analytics.

8. Renault SA's Porter Forces

Forces Ranking

Threat Of Substitutes

Renault SA faces moderate threat from substitutes, as customers have limited alternatives to traditional fossil fuel-based vehicles. However, the growing popularity of electric vehicles and alternative modes of transportation pose a moderate threat to the company's market share.

Bargaining Power Of Customers

Renault SA's customers have limited bargaining power due to the company's strong brand reputation and wide distribution network. Additionally, the company's focus on innovation and customer experience reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Renault SA's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for critical components. However, the company's large scale of operations and diversified supply chain mitigate the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is low for Renault SA due to the high barriers to entry in the automotive industry, including significant capital requirements and regulatory hurdles. Additionally, the company's established brand reputation and distribution network make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry in the automotive industry is high, with many established players competing for market share. Renault SA faces intense competition from global players such as Volkswagen, Toyota, and General Motors, which puts pressure on the company's pricing, innovation, and marketing strategies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 68.94%
Debt Cost 3.95%
Equity Weight 31.06%
Equity Cost 12.40%
WACC 6.57%
Leverage 221.96%

11. Quality Control: Renault SA passed 1 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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Mercedes-Benz

A-Score: 6.7/10

Value: 8.7

Growth: 4.9

Quality: 3.3

Yield: 10.0

Momentum: 6.0

Volatility: 7.3

1-Year Total Return ->

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Porsche

A-Score: 6.3/10

Value: 8.9

Growth: 2.6

Quality: 7.2

Yield: 6.2

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

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NEXT

A-Score: 5.8/10

Value: 1.8

Growth: 5.7

Quality: 6.7

Yield: 4.4

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

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Redrow

A-Score: 5.1/10

Value: 6.8

Growth: 5.2

Quality: 7.4

Yield: 4.4

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Renault

A-Score: 4.4/10

Value: 9.3

Growth: 5.1

Quality: 1.9

Yield: 4.4

Momentum: 2.0

Volatility: 4.0

1-Year Total Return ->

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Volvo Car

A-Score: 4.1/10

Value: 7.1

Growth: 4.9

Quality: 3.3

Yield: 0.0

Momentum: 8.5

Volatility: 0.7

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

31.61$

Current Price

31.61$

Potential

-0.00%

Expected Cash-Flows