Analyst Note| Richard Hilgert |
Narrow-moat-rated Continental reported first-quarter earnings per share of EUR 1.23, beating the EUR 1.15 EPS FactSet consensus by EUR 0.08 but down EUR 1.00 from the EUR 2.23 EPS reported a year ago. Consolidated revenue beat consensus by 3%, increasing 8% to EUR 9.3 billion from EUR 8.6 billion last year. Automotive group organic revenue slipped 1.2%, outperforming a 4.5% global light vehicle production decline by 330 basis points thanks to new business. Tire group organic revenue jumped 17.4% on strong volume and pricing, while ContiTech organic revenue increased 3.6% on non-automotive pricing and volume growth. Our fair value estimate remains EUR 143. The 5-star-rated shares of Continental currently trade at a compelling 55% discount to our fair value.