Morningstar

Morningstar, Inc.

Equity Bottom-Up

No-moat-rated Fiat Chrysler has withdrawn its Renault (also no-moat-rated) merger proposal. Renault's Board met on Tuesday and Wednesday, each resulting in an announcement that a decision would be postponed. In the last press release, the Board said that it, "was unable to take a decision due to the request expressed by the representatives of the French State to postpone the vote to a later Council." Shortly after, Fiat Chrysler issued a press release stating that, while the company believes the…

No-moat-rated Fiat Chrysler has submitted a nonbinding letter to Renault, also no-moat rated, proposing a 50/50 merger of equals where the shareholders of each company would receive an equivalent stake in the merged entity. To even-up the differences in market equity value, Fiat Chrysler shareholders would receive a EUR 1.60 special dividend per share (EUR 2.5 billion) plus spin-off shares of Comau, the industrial robotics company owned by Fiat Chrysler. If Comau is not spun-off, Fiat Chrysler…

No-moat-rated Nissan reported diluted earnings per share of JPY 81.59 for fiscal 2018, ended March 31, missing the JPY 102.32 consensus by JPY 20.73 but just shy of our JPY 82.00 EPS estimate. Consolidated revenue and unit volume declined 3.2% and 4.4%, respectively, while operating profit margin contracted 210 basis points to 2.7%, slightly better than our 2.4% estimate. The stock currently trades at a 43% discount to our JPY 1,480 ($26) fair value estimates. We think the 5-star-rated shares of…

No-moat-rated Renault reported a first-quarter automotive revenue decline of 5.5% to EUR 11.7 billion versus EUR 12.4 billion a year ago. Excluding a 2-percentage-point negative impact from currency translation, automotive revenue would have declined 3.5% year over year. Renault reported that volume and pricing contributed a decline of 4.7 and an increase of 0.3 percentage point, respectively, to revenue at constant currency. The French automaker discloses only revenue in the first and third…

No-moat rated Nissan announced a cut in its guidance for the 2018 fiscal year ending March 31, 2019. Versus the prior guidance, management's operating profit forecast has dropped 29% to JPY 318 billion, from JPY 450 billion, due primarily to a warranty extension on certain models equipped with continuously variable transmissions, but also due to weaker-than-expected operating leverage as global sales volumes were 1.5% lower than prior guidance. Management also blamed slightly weaker sales in…

France

Renault SA designs, manufactures, markets, and repairs passenger cars and light commercial vehicles. The Company also provides financing and service solutions, including credit for new and used vehicles.

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