When you think of luxury, your mind naturally goes to the standard suite of brands that specialize in providing the type of quality that has become their standard. Mercedes Benz Group, or Mercedes Benz AG (DAIGn.DE), has been one of the best car manufacturers globally with their suite of luxury cars and their previous work with Daimler trucks (which they have recently divested from in 2021).
With Mercedes Group finally moving to solidify higher valuations with a recent company change (from the previous Daimler Group), will it be a deal or no deal for your next stock pick?
Quantitative Analysis: Stability but Not Much Else
Despite being one of the top manufacturers of automobiles in the world, much of Mercedes Benz’s stock performance fails to reflect the high expectations an investor may have about its valuation. Whether it’s likely due to the many changes that the company undergoes regularly, with several organizational structural changes occurring in the past decade alone, the price of Mercedes Benz and its subsequent return has been stuck at just 14.04% over the last 5 years, with the past year alone showing price fluctuations between EUR 60 and 65.
As it stands, Mercedes Benz’s price is currently at EUR 63.37, with no clear target price in sight just yet. With a P/E ratio of 2.95 and an estimated market beta of 1.41, you may expect a little movement with the Mercedes Benz group, but not much else.
Qualitative Analysis: EVs are the (Expensive) Future and Luxury Stays
Mercedes Benz is currently enjoying a sudden boom in demand for luxury cars, with industry analysts indicating that the trend is far from over as unmet demand is still being serviced with production processes ramping up on the onset of COVID-19.
Though EV fans may need to take a seat as the Daimler group, though not fully connected anymore to Mercedes Benz as a whole, has indicated the difficulties it would take to get electric car batteries off the ground and fully replace combustion engines anytime soon.
Mercedes Benz, despite its remarkable cars, boasts a fairly unremarkable stock price so far. For return hungry investors, the brand remains a no-deal until it can show signs of further growth beyond larger market influences. Though investors looking to diversify their holdings may enjoy the relative stability on returns that the company offers as part of their personal portfolio.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only