Corporate Finance Case Study: Volkswagen Essay

Volkswagen (VW)Volkswagen (VW) is a German machine manufacturer which was originally founded in 1937. Now VW classify is one of realitys leading automobile manufacturers and the largest carmaker in Europe, with its recent headquarter in Wolfsburg. VW is one of the ten brands under VW Group. (Volkswagen Homepage, 2011) 2011 VWs revenue is 159,337 million EUR net income is 15,409 million EUR, with a avail margin of 9.6707%. (Bloomberg, 2012) The increase from 2010 to 2011 is illustrated obviously in the fol pooring chart. (Bloomberg, 2012)Income Statement for Volkswagen AG ( reprobation) 2010-2011, Bloomberg, 2012 Volkswagen stock (VOW GR)The current percentage price, close (Apr 13, 2012) is 119.3 EUR, its 52-week range is 82.350 138.800 EUR, and its 1- grade return is 14.26%, as well as, market capitalization is 56,601.00 million EUR. (Bloomberg, 2012) Interactive One- stratum argumentation Chart for Volkswagen AG (VOW), Bloomberg, 2011-2012 VOWs Earning Per Share (ttm) is 33. 1 EUR, current P/E Ratio (ttm) is 3.5408, and Dividend Per Share (yield annualized) is 1.8771 EUR. (Bloomberg, 2012) SWOT AnalysisIn recount to draw a conclusion for VWs stock rating, SWOT digest is conducted in this part. StrengthsHigh product quality rugged brand rectitudeVW groups brand portfolio includes Audi, Bentley, Bugatti, Lamborghini, SEAT, 49.9% of Porsche, Giugiaro, koda marques and the truck manufacturer Scania and MAN. (VW Homepage, 2012) Strong R&DWeaknessesHigh costs for implementing the new standard technology (Just-auto, 2012) unsatisfactory focus on shareholder interests (VW Corporate Governance Code,2010) Comparatively low productivityOpportunitiesGood return on VW stocksVW Group Share EPS 2003-2010, VW investor relations, 2012 tremendous purchasing power increase in Chinese marketAcquisitionsThe Volkswagen Group continued its strategic growth trajectory by acquiring Porsche dimension Salzburg and change magnitude its stake in MAN SE. (VW ad hoc, 2011) Thr eatsEuro-zones debt crisis and accordingly orbiculate recession in 2011 Increasing fuel priceStrong competition from Japanese and American manufacturersSuch as Ford, Toyota, Honda, e.t.c.Stock rangeThe investment decision made in this report is to hold VW stock, namely equal-weight as its stock rating. First of all, VW has good performance last year for instance, both VWs revenue and net income grew considerably from 2010 to 2011, even with the negatively charged influence from European debt crisis in the 4th quarter of 2011. Moreover, last year VW Group continued its strategic growth by acquiring 49.9% of Porsche and increasing its stake in MAN SE. This year only in January and February, VW passenger Cars delivery to customers reached the number of 818,800, with an 8% growth comparing with the same prison term of last year. In addition, VWs market is evolution continuously and dramatically in China these years. Until 2018, VWs goal of market growth in China is 29.1%. (VW str ategy 2018, 2012)Secondly, VW shares valuation and earning kept growing stably under the recent years, expect 2009. For example, stocks EPS grew well from 2005 to 2010, which is illustrated clearly in VW Group Share EPS 2003-2010 chart above. Last only when not least, from the long-term perspective, VW has very good potential of strategically growth. fit in to VWs strategic plan 2018, their future vision is to become the worlds most profitable, fascinating and sustainable automobile manufacturer. Furthermore, even straightaway VW has already very high customer satisfaction (rating scale 8.55 show up of 10, 2011) because its high quality and service standards.In order to draw aconclusion, if we look into the previous SWOT analysis again, todays inner(a) weakness could become tomorrows strength applying new modular transverse toolkit technique would bring large profit to VW in the long-run, in spite of todays high R&D and implementing costs. Thus, VW share is a good choice for l ong-term investment. Nevertheless, taking the external threats into consideration, particularly facing nowadays depression for both automobile industry and global economy, stock investment should be very cautious, therefore, in summary, we rated VW stock as equal-weight, which means it is recommended to hold the share as long-term investment.ReferencesBloomberg, 2012. http//www.bloomberg.com/quote/VOWGRJust-auto, 2012. http//www.just-auto.com/news/4-volkswagen-hikes-2011-operating-profit-59-to-new-record_id120644.aspx Volkswagen Homepage, 2011. http//www.volkswagenag.com/content/vwcorp/content/en/homepage.html VW strategy 2018, 2012. http//www.volkswagenag.com/content/vwcorp/info_center/en/talks_and_presentations/2012/03/JPK_IK_2012_Part_III_.bin.html/binarystorageitem/file/Part_III_Charts_Winterkorn.pdf