In a joint statement, Renault Group (RNLSY) and Nissan Motor (NSANY) announced they are discussing several strategic initiatives to set their alliance’s future. However, the key sticking point was that Nissan could consider investing in Renault’s new EV (electric vehicle) entity. However, in return, Nissan could push Renault to cut its stake.
Notably, Renault holds a 43.7% stake in Nissan. Recently, Reuters, citing people familiar with the matter, reported that Nissan has asked Renault to reduce its stake to 15%.
Earlier, during its annual general meeting in June, Nissan shareholders rejected a proposal that would have designated Renault as their parent company.
Whether Renault will cut its stake in Nissan remains a wait-and-watch story. Meanwhile, the latter expects challenges from semiconductor shortage, increase in raw material costs, and geopolitical issues to adversely impact the automotive industry.
Is Nissan a Good Stock to Buy in 2022?
Nissan expects its global sales volume to grow by 3.2% to 4 million units in Fiscal 2022. The guidance includes the weakness in Europe and China. Nevertheless, new product launches will support volumes in other markets.
The company expects its top-line growth to get a boost from the Yen depreciation. Further, improvement in the quality of sales will accelerate the growth rate. Notably, Nissan expects its top line to increase by 18.7% in Fiscal 2022, significantly higher than the volume growth rate. Meanwhile, its operating profit is projected to stay flat compared to the prior year. However, its earnings would decline, reflecting tough comparisons.
Nissan resumed its dividend payments earlier this year and expects to maintain the same level of payouts for 2022.
Given the pros and cons, Nissan stock has a Neutral Smart Score of six out of 10.
