For the first time in the last 10 years, Renault has incurred losses in 2019: 141 million € against the profits of 3,300 million € in 2018. Renault´s stock price went down by 60% in the last 6 months (58.-€ vs. 23.-€).
The French group did not share its restructuring plan yet, however it may include some plant closing to save more than 2.2 billion €. Unluckily for Renault, it is one of the most affected automotive companies by the coronavirus or COVID-19. This is because of its production plant in China is located in Wuhan. Moreover, the decrease in net sales by 125,000 units, added to the world´s most famous runaway of Carlos Ghosn did not help to improve the difficult situation of the French car-maker. Last but not least, Renault does have a 3.1% stake in the capital of Daimler, car-maker which is, in turn, struggling with its results in 2019.
As you may already know, the Nissan-Renault Alliance means synergies for both car-makers. where the French company owns 43% of Nissan’s capital. Similarly, Nissan also incurred losses end of last 2019, meaning that Nissan´s contribution to Renault has decreased from 1,510 million € to 242 million € – compared to the previous year.
As an investor, I am sure you might be a bit worried about your dividend yield this year. In fact, the cash output in 2020 (based on 2019 results) will be drastically decreased to 1.1.-€ per share. Considering a dividend per share of 3.55.-€ last year – dividend yield of 10.75% – it does not seem to be a great year for the investors.
On the positive side, could Renault become a Top stock to watch and buy in 2020 by looking at its current market price? Depending on your investment strategy, I might recommend you to include this stock in your portfolio. Big opportunities to recover its price and get some profits? According to MarketScreener, Renault´s target price is at 41.46.-€ as of today. That means more than 80% of rising!
Renault might be struggling for a few more years, given a very strict restructuring plan to save more than 2.2 billion. You can stay in or runaway! Would you like to share with all of us what you would do?