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Despite pretty much doubling in the past year and a half, Stellantis (NYSE: STLA) is even now relatively cheap, and as you are about to see, they seem to be in a very good position to do well in the future.

Since the FCA - PSA merger, Stellantis keeps breaking records, and last year was no different, with new records in net revenues, profit, and cash flows.

Stellantis' industrial free cash flow was €12.9 billion, which is still very good for a market cap of 70 billion, and I remember making my first video about Stellantis when this was like 35.

To see the potential of such a merger, out of €12.9 billion in industrial free cash flows, they generated €8.4 billion in net cash synergies. Not only that, but imagine how much more leverage they have when negotiating - be it with suppliers or even governments.

By the way, the industrial free cash flow is basically the money they make from selling or renting cars and it doesn’t include financial services. They are doing a bunch of investments and restructuring and stuff but you can see all the numbers in the report. I think it’s a good idea that they separate them because adding financial services can mess up the working capital and ultimately the cash flow, but mostly on paper. Still, they aren’t hiding something and this is common with companies that also offer this kind of financial services.

They have current assets of $91.5 billion, of which $43 billion is in cash, which almost cover the total liabilities, so they are doing very well from this point of view. Think about how much they can do with that money. They can literally buy the 2 biggest lithium companies on the planet - needed for EVs - and still have money to almost do it again. They won’t, of course, but they made many smaller investments recently and still have a lot of money. So, you can see that there is a lot of potential.

They also raised the dividend to €1.55 - a 16% increase - and doubled the buybacks for this year to €3 billion. For the current price, that’s a yield of around 7%, plus 4.5% in buybacks. For my average buying price, it’s pretty much double these amounts, but even today, this is a very good yield.

I really don’t like buybacks at all time highs, but at least they are in a very good position to pay them. Despite the yield being high, the payout ratio for buybacks and dividends is not that much despite the yield being high, so that’s pretty good.

So, overall a very good year, despite labor issues and generally a bad environment with high interest rates, inflation, supply chain issues and so on.


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0:00 Stellantis (NYSE: STLA) Stock Review
0:19 Stellantis (NYSE: STLA) Financial Analysis, Dividends, Risk-Reward
5:42 Stellantis (NYSE: STLA) Stock Valuation + Price Target

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