Covestro (1COV) AI Stock Analysis

• Market Cap: €11.00B
• Dividend Yield: N/A
• Average Volume (3M): 16.34K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.06
• Revenue Growth: 0.01%
• EPS Growth: -88.69%
• Country: DE
• Employees: 17,578
• Sector: Basic Materials
• Sector Strength: 66
• Industry: Chemicals - Specialty
• EPS (TTM): -0.85
• Shares Outstanding: 189,000,000
• 10 Day Avg. Volume: 16,581
• 30 Day Avg. Volume: 16,340
• PEG Ratio: 0.21
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 50.57
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €61.80
• Price Target Upside: 1.58% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 57 Neutral
• Price Target: €62.00 ▲(1.91%Upside)

Covestro's overall stock score is primarily impacted by financial performance and valuation challenges, with declining profitability and a negative P/E ratio. However, positive technical momentum offers some optimism, mitigating the downsides.

Covestro Business Overview & Revenue Model

Company Description

Covestro AG supplies high-tech polymer materials and related application solutions. It operates in two segments, Performance Materials, and Solutions & Specialties. The Performance Materials segment develops, produces, and supplies high-performance materials, such as polyurethanes and polycarbonates, and base chemicals, which include diphenylmethane diisocyanate (MDI), toluylene diisocyanate, long-chain polyols, and polycarbonate resins for use in furniture and wood processing, construction, automotive, and transportation industries, as well as roof structures, insulation for buildings and refrigerators, mattresses, car seats, and other applications. The Solutions & Specialties segment comprises a range of polymer products, including precursors for coatings and adhesives, polycarbonates, MDI specialties and polyols, specialty films, elastomers, and thermoplastic polyurethanes that are used in automotive and transportation, electrical, electronics and household appliances, construction, and healthcare industries, as well as composite resins for wind turbine, rotor blades, laptop cases, and floodlights. The company markets its products through trading houses and distributors. It operates in Europe, the Middle East, Africa, Latin America, the United States, Canada, and the People's Republic of China. The company was founded in 1863 and is headquartered in Leverkusen, Germany.

How the Company Makes Money

Covestro generates revenue primarily through the sale of its high-performance polymer materials across its three business segments. In the Polyurethanes segment, the company produces raw materials for rigid and flexible foams used in insulation, automotive seating, and mattresses. The Polycarbonates segment focuses on producing thermoplastic polymers that are utilized in applications such as automotive components, electronic devices, and medical products. The Coatings, Adhesives, and Specialties (CAS) segment provides materials for coatings, adhesives, and sealants used in various industries. Covestro's earnings are augmented by its strong emphasis on research and development, which drives innovation and helps the company maintain a competitive edge in the market. Additionally, strategic partnerships and collaborations with other industry leaders enable Covestro to expand its market reach and enhance its product offerings, contributing further to its revenue streams.

Covestro Financial Statement Overview

Summary

Covestro is experiencing declining revenue and profitability, with negative net profit and free cash flow, indicating financial challenges. While leverage is manageable, the company struggles with returns and cash flow stability.

Income Statement

Covestro's income statement reflects a challenging period with declining revenue and profitability. The TTM shows a negative net profit margin of -2.76%, indicating losses. The gross profit margin has decreased to 14.4% in the TTM from 15.4% in the previous year, pointing to cost pressures. EBIT and EBITDA margins have also weakened, with EBIT margin turning negative. The company faces declining revenue growth, with a TTM revenue drop of 0.2% compared to the previous annual period. These factors highlight significant profitability challenges.

Balance Sheet

The balance sheet reveals moderate financial health. Debt-to-equity ratio is at 0.58 in the TTM, showing manageable leverage. However, the equity ratio has slightly decreased to 45.6% from 48.8% in the previous year, indicating less stability in equity financing. Return on equity is negative due to net losses, suggesting inefficiencies in generating shareholder returns. Overall, Covestro maintains a balanced financial structure but faces challenges in equity efficiency.

Cash Flow

Cash flow analysis indicates operational challenges. The TTM operating cash flow to net income ratio is negative due to net losses, although operating cash generation remains relatively stable. Free cash flow has turned negative in the TTM, reflecting increased capital expenditures and declining profitability. The free cash flow to net income ratio is also negative, highlighting cash flow pressures. Covestro's cash flow position suggests potential liquidity strains if trends persist.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
14.15B	14.18B	14.38B	17.97B	15.90B	10.71B
	Gross Profit
2.04B	2.18B	2.31B	2.56B	4.43B	2.50B
	EBIT
-179.00M	27.00M	156.00M	275.00M	2.24B	710.00M
	EBITDA
949.00M	1.12B	1.14B	1.11B	3.06B	1.44B
	Net Income Common Stockholders
-391.00M	-266.00M	-198.00M	-272.00M	1.62B	459.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
789.00M	518.00M	625.00M	1.20B	714.00M	2.17B
	Total Assets
14.05B	13.63B	13.64B	14.59B	15.57B	12.92B
	Total Debt
3.71B	3.10B	3.39B	3.66B	2.53B	2.89B
	Net Debt
2.96B	2.59B	2.77B	2.46B	1.88B	1.49B
	Total Liabilities
7.63B	6.95B	7.02B	7.46B	7.81B	7.28B
	Stockholders Equity
6.41B	6.66B	6.59B	7.09B	7.70B	5.61B
Cash Flow		Free Cash Flow
-56.00M	89.00M	232.00M	138.00M	1.43B	530.00M
	Operating Cash Flow
799.00M	870.00M	997.00M	970.00M	2.19B	1.23B
	Investing Cash Flow
-768.00M	-423.00M	-925.00M	-477.00M	-2.00B	-1.77B
	Financing Cash Flow
12.00M	-565.00M	-639.00M	64.00M	-965.00M	1.20B

Covestro Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 60.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:1COV, the sentiment is Positive. The current price of 60.84 is above the 20-day moving average (MA) of 59.94, above the 50-day MA of 59.48, and above the 200-day MA of 57.95, indicating a bullish trend. The MACD of 0.16 indicates Negative momentum. The RSI at 64.23 is Neutral, neither overbought nor oversold. The STOCH value of 55.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:1COV.

Covestro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1COV	57 Neutral	€11.00B	―	-6.00%	―	0.01%	-88.69%
Sector *	51 Neutral	$1.99B	-1.26	-21.11%	5.30%	2.92%	-30.46%
0MPT		€8.40B	15.91	11.49%	3.60%	―	―
0QDS		€8.47B	28.43	3.25%	6.41%	―	―
0G6T		€13.51B	28.63	12.56%	1.23%	―	―
LNXSF		$2.41B	―	-3.92%	0.38%	―	―
WKCMF		$3.50B	13.86	5.37%	3.87%	―	―