VALEO

Analysis of Valeo share price

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You are probably all familiar with the names of the major French automotive groups, but there are also companies that are less popular but just as important in terms of vehicle production. This is the case of Valeo, a company that we are going to present to you here in more detail, and whose stock market shares are among the most popular in this sector at the moment.

Latest news

Valeo's market cap, dividends, sales and earnings in 2020

16/11/2021 - 12h54

In February 2021, the Board of Directors of the Valeo Group approved the annual accounts for the year 2020. For the year as a whole, the company's performance was not as good.

Elements that can influence the price of this asset:

Analysis N°1

We will of course keep a close eye on the automotive market and on the number of vehicles ordered by customers, which will provide good visibility regarding the growth of this company.

Analysis N°2

We will also be closely monitoring the evolution of Valeo's sales in certain countries around the world where the automotive industry is booming and where growth is strong, such as China, which has become one of the Group's main target markets.

Analysis N°3

Valeo's financial and statistical data will also be followed with interest, such as growth rates and profitability, as well as global economic growth in general.

Analysis N°4

Among the factors that influence the profitability of the Valeo Group are the price of raw materials and its evolution. You should therefore keep an eye on this market in order to follow the main trends that could have an impact on the company's production costs.

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General presentation of Valeo

The French group Valéo is currently one of the largest designers, manufacturers and sellers of automotive parts and equipment. However, its activity can be divided into several main areas, which are :

  • Visibility systems such as lighting, signalling and wiping systems.
  • Thermal equipment with heating, air conditioning or compressors and engine coolers and oil exchangers.
  • Propulsion systems such as starters, alternators or transmission systems.
  • Finally, comfort and driving assistance systems with switching and detection systems or safety equipment such as keyless access systems, steering locks and others.

With no less than 186 production sites throughout the world, Valéo employs 114,000 people and serves the French, European, African, Asian and American markets.

Analysis of Valeo share price
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The major competitors of Valeo

In this section, we propose that you deepen your knowledge of the sectoral environment in which the Valéo group operates, including a presentation of its main competitors. Here is a list of the largest companies in the automotive equipment sector which can take market share from Valéo.

Continental AG 

First of all, the Continental group, which was founded in 1871, is a German automotive equipment manufacturer with its headquarters in Hanover. The group is primarily known for its tyres, but this multinational company also manufactures other automotive parts and specialises in rubber recycling.

Faurecia

Another direct competitor of Valéo is of course the French Faurecia group. It is an engineering and production group for automotive equipment and is responsible for developing, manufacturing and marketing equipment for car manufacturers, such as seats, interior systems with instrument panels, door panels, decorative elements and acoustic modules, emission control technologies, etc.

Plastic Omnium

Again, this is a French competitor of Valéo. This company is an industrial group created in 1946 by Pierre Burelle and controlled by his family. 10 billion and employs over 32,000 people. It owns and operates 131 production plants, 26 research and development centres and is present in 26 countries around the world. Plastic Omnium is also listed on the Paris stock exchange, in the Next 150 and CAC Mid 60 indices. The Company is also a member of the Automotive Platform and the European Association of Automotive Suppliers, CLEPA. Plastic Omnium is also a member of the hydrogen council.

Bosch

Another direct competitor of Valéo is Bosch, a German multinational founded by Robert Bosch in 1886. This group carries out several types of activity and is notably an equipment supplier for the automobile industry. It is also a manufacturer of power tools and household appliances, a specialist in industrial and building technology and packaging technology.

Magna International

This Canadian company specialises in automotive equipment and is a supplier to many drivers. It is based in Aurora, a northern suburb of Toronto, Ontario. The company currently employs more than 107,000 people and is present in 26 countries.

BASF 

Finally, the German chemical group is also in competition with Valéo. It is the world's largest chemical group, which is active in the production of a variety of speciality chemicals and counts many car manufacturers among its customers. The group employs more than 34,000 people in the development, testing, manufacture and sale of several thousand products, including products for the automotive industry.


The major partners of Valeo

Finally, here are the recent partnerships set up by Valeo with other companies.

Safran

On March 27, 2015, Valeo and Safran presented a jointly developed autonomous car that combines the best of automotive and aerospace technologies.

Mobileye

In the same year, French automotive supplier Valeo and Israeli company Mobileye signed a technology partnership covering active safety as well as the autonomous car. In 2019, the group also signed a partnership agreement with the company Mobileeye as part of the future development and promotion of a new safety standard for autonomous vehicles based on the Responsibility-Sensitive Safety model.

Siemens

In 2016, Valeo announced its combination with Siemens to create a joint venture dedicated to electric propulsion systems.

Capgemini

Also in 2016, Valeo and Capgemini, one of the world's leading providers of consulting, IT and outsourcing services, announced the commercial launch of Mov'InBlue, a groundbreaking smart mobility solution for corporate fleets and vehicle rental companies.

NTT Domoco

In 2018, it was with NTT Domoco, Japan's leading mobile phone company, that Valeo set up a partnership regarding the development and sale of connectivity solutions for vehicles.

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The factors in favour of a rise in the Valeo share price:

The positioning of the Valeo Group in its sector of activity is of course an undeniable strength for the performance of its share price. Valeo is the world's leading automotive equipment manufacturer, which gives it a certain reputation and undeniable strength in the market.

On the other hand, the Valeo Group has succeeded in positioning itself strategically on a particularly coveted market, namely China. Indeed, more than 14% of the company's original equipment sales are made on the Chinese market, whereas original equipment sales in Western Europe represent only 34% and those in North America only 22%. Compared to the promise and opportunities offered by the Chinese market, this performance can be considered lesser. It is therefore likely that Valeo will be able to maintain its lead in emerging markets and take advantage of this advantage over its main competitors.

The strong growth of the automotive market can also be considered as an asset for the Valeo Group, which has been experiencing interesting annual growth rates for several years now, despite the rather morose economic context and the decline in activity recorded by many other sectors. With its leading position, Valeo is the first to benefit from this increase in demand by filling its order book and multiplying new contracts.

We also appreciate the good division of the Valeo Group's activities into four main areas: comfort equipment, propulsion equipment, thermal equipment and visibility equipment. Thanks to this intelligent division, Valeo is able to supply all automotive companies and meet different needs while protecting itself from the risks associated with a single type of product.

Valeo is also remarkable for the quality of its innovation policy. The Group is focusing on innovations in certain very popular sectors such as CO2 emissions reduction, which enable it to offer its customers products with greater added value and a more comfortable margin, such as Premium OEM, energy efficiency, Stop&Start, superchargers, sensors, connectivity and laser scanners for automatic vehicles.

Investors are naturally very reassured by Valeo's ability to offer excellent visibility on its future growth. This applies in particular to forecasts for its sales and orders, which have been at record levels for several years.

The Valeo Group also benefits from an attractive exchange rate with its main customers in the Asian and American markets, thanks to an advantageous euro/dollar parity.

Finally, Valeo's strong capacity to contain its level of debt should be emphasized, which has earned it a particularly high rating from the rating agencies and thus increased investor confidence.

The factors in favour of a drop in the Valeo share price:

Firstly, although the automotive manufacturing sector is currently experiencing a rather positive period of growth with an increase in demand and orders, the automotive supplier sector has remained under pressure since 2016 and Valeo is of course paying the price, which is a cause for concern for the markets.

The Valeo Group is also at the heart of an investigation into a possible cartel with other suppliers to the automotive industry by the European Commission. It is therefore at risk of being fined, the amount of which will be more or less high, and the consequences of which could be significant both in terms of the group's financial results and investor confidence, and therefore the performance of its shares on the stock market.

Valeo's profitability risks also include the very high exposure of its activities to the raw materials market. The price of certain raw materials sometimes leads to a significant increase in production costs, significantly reducing margins or making the company less competitive.

After having succeeded in positioning itself in a stable manner on the Chinese market, which offers numerous opportunities, the Valeo Group could, in a contradictory manner, suffer the effects of the economic slowdown in this country, which has been observed for several years and could weigh on future sales and contracts.

Finally, we notice that Valeo shares are considered relatively expensive to buy. This feeling of overpricing leads of course to strong negative reactions on the stock charts when a doubt or a fear appears.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

How to read Valeo's financial statement?

You can follow the publication of the Valeo Group's financial results directly on the company's website or from a specific stock market news feed or site. As far as the latest published balance sheet is concerned, it is for the 2019 financial year. This one shows, among other things, a turnover of 19,124 million euros and a net result of 546 million euros. The current market capitalization (in 2020) of this company, is around 8,478 million euros.

In which countries are Valeo's major subsidiaries based?

As you probably already know, the Valeo group does not only operate in the French market. In fact, the company has several subsidiaries located all over the world, including one in Ireland, one in Germany, one in South Korea, one in Japan, one in Brazil and one in the United States. It is also likely that the company will create new subsidiaries in other countries as part of its expansion strategy.

What are the key figures to know about the Valeo share?

Several figures are interesting to know about the Valeo share. In particular, 113,600 is the number of employees, 33 is the number of countries in which the group is present, 186 is the number of production sites, 38 is the number of development centers and 15 is the number of distribution platforms.

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