Compagnie Générale des Établissements Michelin (ML) AI Stock Analysis

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Compagnie Générale des Établissements Michelin

(OTC:ML)

67Neutral

The stock reflects a solid financial performance with strong profitability and cash generation, though revenue and cash flow volatility are risks. Valuation is attractive with a reasonable P/E and high dividend yield. Technical indicators present a mixed picture, with potential overbought signals.

Compagnie Générale des Établissements Michelin (ML) vs. S&P 500 (SPY)

Market Cap

$23.55B

Dividend Yield4.04%

Average Volume (3M)1.60M

Price to Earnings (P/E)12.6

Beta (1Y)0.81

Revenue Growth-4.06%

EPS Growth-4.47%

CountryFR

Employees118,400

SectorIndustrials

Sector Strength82

IndustryAuto - Parts

Share Statistics

EPS (TTM)2.65

Shares Outstanding705,747,250

10 Day Avg. Volume1,330,666

30 Day Avg. Volume1,600,725

Financial Highlights & Ratios

PEG Ratio-6.83

Price to Book (P/B)1.29

Price to Sales (P/S)0.00

P/FCF Ratio32.57

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$36.57

Price Target Upside9.60% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Compagnie Générale des Établissements Michelin Business Overview & Revenue Model

Company DescriptionCompagnie Générale des Établissements Michelin, commonly known as Michelin, is a leading global tire manufacturer headquartered in Clermont-Ferrand, France. Founded in 1889, the company operates in several sectors, primarily focusing on the design, production, and distribution of tires for various types of vehicles, including automobiles, airplanes, bicycles, motorcycles, and heavy-duty equipment. Michelin is also known for its involvement in publishing travel guides, maps, and the Michelin Guide, which awards stars to restaurants and hotels.

How the Company Makes MoneyMichelin generates revenue primarily through the sale of tires across different segments, including passenger cars, trucks, agricultural machinery, aircraft, and bicycles. The company's revenue model is driven by both replacement tire sales and original equipment manufacturer (OEM) contracts, where Michelin supplies tires to vehicle manufacturers. In addition to its core tire business, Michelin earns revenue from its travel-related services, such as maps and guides. The company also engages in strategic partnerships and collaborations to enhance its product offerings and market reach, contributing to its overall earnings. Michelin's focus on innovation and sustainable mobility solutions further supports its revenue streams by catering to evolving consumer and industry demands.

Compagnie Générale des Établissements Michelin Financial Statement Overview

Summary

Compagnie Générale des Établissements Michelin displays robust profitability margins and a strong cash generation capability. However, the volatility in revenue and free cash flow growth suggests potential risks in maintaining consistent growth. The balance sheet reflects a stable financial position but indicates room for improvement in leveraging and return on equity.

Income Statement

Positive

The company shows a strong gross profit margin consistently above 20%, indicating efficient cost management. However, the net profit margin has seen a slight decline in recent years. Revenue growth has been erratic, with a notable drop in 2023. EBIT and EBITDA margins have remained stable, reflecting steady operational performance.

Balance Sheet

Positive

The debt-to-equity ratio is moderate, indicating a balanced approach to leveraging. Return on equity shows a slight decline, suggesting a need for improved profitability. The equity ratio is stable, which is a good sign of financial stability.

Cash Flow

Positive

Free cash flow growth has been volatile, with significant fluctuations. The operating cash flow to net income ratio is healthy, suggesting strong cash generation capability. However, the free cash flow to net income ratio has been inconsistent, which may raise concerns about cash management efficiency.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
27.19B	28.34B	28.59B	23.80B	20.47B
	Gross Profit
7.75B	7.95B	7.46B	6.91B	5.63B
	EBIT
2.63B	2.65B	3.33B	2.91B	1.89B
	EBITDA
4.39B	4.88B	4.90B	4.54B	3.17B
	Net Income Common Stockholders
1.88B	1.98B	2.00B	1.84B	632.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.03B	2.80B	2.58B	4.48B	4.75B
	Total Assets
37.35B	35.20B	35.35B	34.54B	31.64B
	Total Debt
7.37B	6.24B	7.45B	8.00B	8.74B
	Net Debt
3.63B	3.73B	4.87B	3.52B	3.99B
	Total Liabilities
18.72B	17.24B	18.23B	19.57B	19.01B
	Stockholders Equity
18.63B	17.95B	17.11B	14.97B	12.63B
Cash Flow		Free Cash Flow
2.07B	3.05B	-210.00M	1.20B	1.99B
	Operating Cash Flow
4.34B	5.29B	1.93B	2.91B	3.37B
	Investing Cash Flow
-2.11B	-2.93B	-1.95B	-1.75B	-1.39B
	Financing Cash Flow
-794.00M	-2.34B	-1.86B	-1.43B	1.34B

Compagnie Générale des Établissements Michelin Technical Analysis

Technical Analysis Sentiment

Positive

Last Price33.37

Price Trends

50DMA

32.46

Positive

100DMA

32.57

Positive

200DMA

33.21

Positive

Market Momentum

MACD

0.31

Negative

RSI

65.25

Neutral

STOCH

92.02

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:ML, the sentiment is Positive. The current price of 33.37 is above the 20-day moving average (MA) of 31.17, above the 50-day MA of 32.46, and above the 200-day MA of 33.21, indicating a bullish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 65.25 is Neutral, neither overbought nor oversold. The STOCH value of 92.02 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:ML.

Compagnie Générale des Établissements Michelin Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AIR	74 Outperform	$123.98B	28.21	21.75%	1.19%	5.16%	12.89%
VIE	72 Outperform	€23.67B	21.11	13.14%	3.92%	-1.45%	14.74%
RNO	69 Neutral	€13.80B	17.26	2.50%	3.88%	7.36%	-64.31%
ML	67 Neutral	$23.55B	12.59	10.41%	4.04%	-4.06%	-4.47%
Sector *	64 Neutral	$4.30B	11.84	5.23%	249.82%	4.10%	-10.59%
SAF	59 Neutral	€103.44B	62.44	-6.13%	0.89%	17.19%	-119.44%
ALO	48 Neutral	€10.20B	―	-2.71%	1.24%	6.21%	-128.82%

* Industrials Sector Average

Performance Comparison

FR:ML

Compagnie Générale des Établissements Michelin

33.37

-2.73

-7.57%

FR:RNO

Renault

47.66

2.36

5.21%

FR:AIR

Airbus Group SE

158.44

3.95

2.56%

FR:ALO

Alstom SA

22.11

5.13

30.24%

FR:SAF

SAFRAN SA

248.20

40.81

19.68%

FR:VIE

Veolia Environnement

31.88

2.84

9.78%

Compagnie Générale des Établissements Michelin Earnings Call Summary

Earnings Call Date:Feb 12, 2025

(Q2-2024)

% Change Since: 1.40%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong operating income, cash flow, and improvements in safety and environmental metrics. However, challenges were noted with sales declines due to currency effects, market distortions from budget tire inflows, and a negative impact from price indexation clauses. Despite these challenges, the company maintained its guidance and showed resilience in its operational performance.

Q2-2024 Updates

Positive Updates

Strong Operating Income and Cash Flow

Segment operating income reached 13.2% of sales in H1, an increase from 12.1% in H1 2023. Strong cash flow generation before acquisition of EUR 669 million was achieved.

Improved Safety and Gender Diversity

The group's safety performance improved with a total case incident rate at 1, and the percentage of women in managerial positions increased to 30.6%.

CO2 Emissions and Water Withdrawal Reduction

Reduction of CO2 emissions by 7.2% and water withdrawal by 6.3% compared to the first semester of 2023.

Margin Recovery in Road Transportation

The segment showed strong margin recovery from 5% to 9.2%, benefiting from a targeted market approach and growing contribution from Connected Solutions.

Strong Mix Improvement

A strong 1.9% mix improvement offset the negative price effect from indexation clauses.

Positive Debt Ratings

Moody's upgraded Michelin's long-term debt from A3 to A2, and Scope rated it as A.

Negative Updates

Sales Decline Due to Currency Effects

Sales ended at EUR 13.5 billion, down 3.1% excluding the currency effect.

Market Distortions from Budget Tire Inflows

The tire market was distorted by high inflows of budget tires, particularly affecting passenger car and truck replacement markets.

Negative Impact of Price Indexation Clauses

A negative price effect of 0.8% was attributed to indexation clauses, impacting the automotive segment despite a strong mix.

Reduced Original Equipment Markets

OE markets saw a sharp decline, particularly in Europe with a 5% decrease, and North America with a 9% decrease for original equipment truck tires.

Challenges in Specialty Segment

The specialty segment faced adverse contexts from weak OE, particularly in agricultural and construction sectors, leading to a 7.2% volume decline.

Company Guidance

In the second quarter 2024 earnings call for Michelin (ML.PA), management provided guidance highlighting a strong operational performance despite a challenging market environment. The company reported a segment operating income of 13.2% of sales for the first half, up from 12.1% in the same period last year, and a robust cash flow generation of EUR 669 million before acquisitions. Sales reached EUR 13.5 billion, a decline of 3.1% excluding currency effects, with a mix improvement of 1.9% offsetting negative pricing due to indexation clauses. The guidance for 2024 remains unchanged, with expectations for segment operating income to exceed EUR 3.5 billion at constant exchange rates and free cash flow to surpass EUR 1.5 billion before acquisitions. Michelin also emphasized continued progress in strategic areas, such as increasing the number of women in managerial positions to 30.6% and reducing CO2 emissions by 7.2% compared to the first half of 2023.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.