Aktie im Blick: Warum boomt mit einem Mal die Volkswagen-Aktie?

The German stock market index, the Dax, lost almost a percent over the course of a month due to rising oil prices and interest rates, which is bad news for both companies and consumers. However, one of the biggest laggards of recent years, Volkswagen, has surged to the top with a seven percent increase. No other company in the Dax is performing better at the moment.

After the stock plummeted over the past five years, losing over half its value, investors are now rewarding the management for taking tough cuts to improve efficiency in the group, despite strong resistance from the works council. This is urgently needed as net profit has fallen by 56 percent in just three fiscal years since 2022, and the dividend has fallen by 40 percent. This is due to overcapacity, high costs, expensive and unpopular car models, and insufficient speed in switching to competitive electric vehicles.

Because the German state of Niedersachsen and the employee representatives historically have a significant influence on the Volkswagen group, every step towards structural reforms is considered a major success by investors. Volkswagen plans to cut 50,000 jobs worldwide, in addition to the 50,000 already agreed upon in Germany at the end of 2024. It is still unclear whether the four plants in Emden, Zwickau, Hannover, and Neckarsulm will continue production after their current models are phased out.

Chart-wise, the situation looked good even before the recent price increase. Analysts point to a promising reversal formation after the long downtrend. The stock had no new marked downward spikes despite numerous bad news about sales, profit, and profitability declines, but rather moved sideways with fluctuations. This showed many market participants that investors had already sold positions they wanted to liquidate.

In such a case, a price often rises simply because no new bad news follows. The favorable starting position comes with an extremely low valuation, with investors paying the group only 4.1 times the earnings per share, based on analyst forecasts of net profits in the next four quarters. At this price-to-earnings ratio, the stock is valued lower than any other Dax title and lower than all major European and American conglomerates.

The low valuation attracted value investors recently, which is typical for a generally weak and nervous market overall. In such a phase, high-valued stocks are sold off, and investors concentrate on remaining value stocks.

Only 14 out of 26 national and international analysts who regularly analyze the company recommend buying the stock, while only two suggest selling. The average target price for a year's horizon is 103 euros, well above the current level by 25 percent. Is the VW stock now a worthwhile purchase? Analysts say so.