Markets & Investing
Daimler Continues to Roll
28 Oct 2015
Daimler AG has been on a winning streak this year, though you wouldn’t know it if you looked at its shares. Although the stock is up only 5% on the year, to say its run has been impressive is an understatement. The latest good news came in the form of the company’s third quarter results. Here are the highlights:
- Revenue rose to €37.3 billion, a 13% increase from this time last year
- Operating profit increased by a whopping 31% to €3.66 billion.
- Net profit was actually down from last year, coming in at €2.39, still managing to beat analyst estimates.
- Global sales volume rose by 13% to 720,000 units sold.
The rise of Mercedes-Benz
Mercedes-Benz has been around for a long time, but recent pushes by Daimler’s luxury auto segment puts it in a position to take over Audi’s spot as the world’s second-biggest luxury-auto maker. With its current momentum, it’s likely it will be able to overtake BMW by the end of the decade as the world’s largest.
China has been the biggest boon for Mercedes-Benz. Its deliveries in the emerging market rose 31% in the third quarter, even with the recent stock market volatility and currency devaluation turning Chinese consumers wary of buying new cars. Compare that with BMW’s 2% increase and Audi’s flat deliveries and you can tell Mercedes-Benz is onto something and has the momentum it needs to keep it going.
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Investors worried
Despite the insane growth Daimler AG has seen in the Mercedes-Benz division, investors are afraid that the company has outdone itself and won’t get any better from here on out. Like with California-based Apple, consistently beating expectations only raises expectations, eventually to the point of making it impossible to achieve them. Not everyone is convinced that’s the case, though.
“The market thinks Daimler has reached the peak for now,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “I think Daimler will stay strong for longer than people expect, but it won’t have meaningful improvements from here.”
That sounds quite a bit more reasonable, doesn’t it? I mean, sure it’s hard to beat the kind of growth the company is seeing. But unless we see a sudden drop in delivery growth in China, I’d say there’s no reason to think the company’s streak is in trouble.
