Corporate Finance Case Study: Volkswagen Essay

Volkswagen (VW)Volkswagen (VW) is a German automobile manufacturer which was originally founded in 1937. Now VW Group is one of balls 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 one million million EUR net income is 15,409 million EUR, with a profit margin of 9.6707%. (Bloomberg, 2012) The increase from 2010 to 2011 is illustrated obviously in the following chart. (Bloomberg, 2012)Income Statement for Volkswagen AG (VOW) 2010-2011, Bloomberg, 2012 Volkswagen stock (VOW GR)The current parcel out price, close (Apr 13, 2012) is 119.3 EUR, its 52-week range is 82.350 138.800 EUR, and its 1-year ease up is 14.26%, as well as, market capitalization is 56,601.00 million EUR. (Bloomberg, 2012) Interactive One-year Stock Chart for Volkswagen AG (VOW), Bloomberg, 2011-2012 VOWs Earning Per partake in (ttm) is 33.1 EUR, curr ent P/E Ratio (ttm) is 3.5408, and Dividend Per Share (yield annualized) is 1.8771 EUR. (Bloomberg, 2012) SWOT AnalysisIn order to draw a conclusion for VWs stock rating, SWOT analysis is conducted in this part. Strengths racy product qualityStrong brand equityVW 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 modular technology (Just-auto, 2012) Inadequate focus on bundle restrainer interests (VW Corporate Governance Code,2010) Comparatively low productivityOpportunitiesGood get on VW stocksVW Group Share EPS 2003-2010, VW investor relations, 2012Large purchasing power increase in Chinese marketAcquisitionsThe Volkswagen Group continued its strategic growth flight by acquiring Porsche Holding Salzburg and increasing its military post in MAN SE. (VW ad hoc, 2011) ThreatsEuro-zones debt crisis an d consequently global recession in 2011 Increasing raise priceStrong competition from Japanese and American manufacturersSuch as Ford, Toyota, Honda, e.t.c.Stock RatingThe 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 electronegative 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 time of last year. In addition, VWs market is growing continuously and dramatically in China these years. Until 2018, VWs goal of market growth in China is 29.1%. (VW strategy 2018, 2012)Secondly, VW shares valuation a nd earning kept growing stably under the recent years, expect 2009. For example, stocks EPS grew substantially from 2005 to 2010, which is illustrated clearly in VW Group Share EPS 2003-2010 chart above. Last but not least, from the long-term perspective, VW has very good potential of strategically growth. According to VWs strategic plan 2018, their future spate is to become the worlds most profitable, fascinating and sustainable automobile manufacturer. Furthermore, even today VW has already very high customer satisfaction (rating master 8.55 out 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 indispensable weakness could become tomorrows strength applying new modular transverse toolkit technique would bring large profit to VW in the long-run, in wound of todays high R&D and implementing costs. Thus, VW share is a good choice for long-term investment. Nevertheless, taking the exte rnal threats into consideration, especially facing straightaway 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