I bought a significant position in the company 2nd October and have thus far had a 28 % return on my investment. At the time of the purchase BMW was trading at a trailing P/E of 8.6x. The stock is currently trading at a trailing P/E of 10.7x, still significantly below most comparable companies. I will exit my position when the company is trading in the 12 - 13x trailing P/E range (inline with the rest of the industry). The company´s justified trailing P/E is 12.5x if one assumes a 5 % growth in dividends, 8 % required rate of return and a 34 % payout ratio. It is not too late to get in on the action.
Peer analysis:
Source: Financial Times
Besides still being priced cheaply compared to many of its peers BMW is one of the most valuable brands in the world and a solid company that has proven steady growth. According to Forbes BMW is the 16th most valuable brand in the world, and the second most valuable automobile brand. The brand´s focus on solid, quick and sporty cars have been a successful receipt for decades.
Automobile brand value:
Source: Forbes
Consensus expected earnings growth BMW:
Source: Financial Times
My BMW M4 (I may hold on to this stock out of loyalty):
Disclosure: I am long Bayerische Motoren Werke AG
I wrote this article myself, and it expresses my own opinions. I am not receiving any compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
