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(Marin Tomas/Getty Images/iStockphoto)
(Marin Tomas/Getty Images/iStockphoto)

NUMBER CRUNCHER

Global auto stocks with sales and earnings traction Add to ...

Mr. Bowman is a portfolio manager at Hamilton-based Wickham Investment Counsel Inc., an adviser to high net worth clients. michael@wickhaminvestments.com

What are we looking for?

Global auto sales posted steady gains in the first half of 2013 and should climb to a record high for the year. This week, my colleague Rob Belanger and I take a look at automobile manufacturers from around the globe.

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The screen

Our list started with companies larger than $8-billion in market capitalization, and they are sorted from the largest to the smallest.

The forward price-earnings ratio for the next 12 months is a measure of P/E using forecasted earnings, and a low number is preferable.

The debt-to-equity ratio indicates what portion of equity and debt the company is using to finance its operations. As a way to screen out highly leveraged companies, we are again looking for a low number.

Operating margin is a measure of what portion of a company’s revenue is left over after paying for the variable costs of production. If a company has an operating margin of 12 per cent, it means that the company makes 12 cents, before interest and taxes, for every dollar of sales. We are showing an average for the past three years.

Return on equity (ROE) measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. We are showing the three-year average, and a high number is preferred. Companies had to have a positive ROE to be included in our list.

Return on investment (ROI) is a performance measure used to evaluate the efficiency of a company. Only companies with a positive ROI made the screen.

What did we find?

Formed in 1976, China’s Great Wall Motors has the highest operating margin, ROE, and one-year total return. The company also has a very low debt level, with high sales growth and ROI.

Ford and Mazda did not make the list as both have a negative ROE. Tesla does not have enough history to warrant a position on our screen, but the company has a P/E of 154, has sold 5,100 vehicles, and the one-year return is 484 per cent.

Audi has the highest ROI and the lowest debt.

State-owned SAIC, formerly known as Shanghai Automotive Industry Corp., has the lowest forward P/E and the highest three-year sales growth.

Investors would be well advised to contact an investment professional, or conduct further research.

 

Global auto stocks

Company Ticker Market
Cap
($-bil)
Fwd P/E
Next
12 Mths
Toyota Motor TM-N 216.86 10.71
Volkswagen AG VOW-Ger 103.52 7.05
Daimler AG DAI-Ger 77.39 10.41
Honda Motor HMC-N 69.8 10.42
Bayer Motoren BMW-Ger 66.2 9.62
Hyundai Motor 005380-Kor 50.31 6.71
General Motors GM-N 50.04 8.77
Nissan Motor 7201-Jpn 46.78 8.71
Audi AG NSU-Ger 35.09 7.68
Kia Motors 000270-Kor 25.16 6.59

All currencies in US$. Source: Bloomberg and Wickham Investment Counsel Inc.

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  • TM-N
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  • GM-N
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