Should I buy BMW shares in June 2022?

By: Stanko Iliev
Stanko Iliev
Stanko is a Financial Analyst for Invezz covering stocks, cryptocurrencies, and worldwide indices. He has significant experience trading forex,… read more.
on May 23, 2022
  • BMW made a strong start to 2022
  • Total revenue has increased by 16.3% Y/Y in Q1
  • BMW continues to focus on speeding up electric vehicle adoption

Bayerische Motoren Werke AG (ETR: BMW) shares have weakened approximately 15% since the beginning of the 2022 year, and the current share price stands at €78.

European automakers continue to face challenges, but despite this, BMW reported solid first-quarter results this month.

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BMW continues to focus on speeding up electric vehicle adoption

Bayerische Motoren Werke AG reported solid first-quarter results this month; total revenue has increased by 16.3% Y/Y to €31.14 billion, while the GAAP earnings per share were €15.33.

It is important to mention that financial results include the one-time effect of €7.66 billion from the fair market valuation of the existing 50% stake held in BBA. This also increased the company’s earnings before tax which totaled €12.23 billion at the end of March, which resulted in an EBT margin of 39.2%.

Vehicle sales decreased by 7.8% in Europe and 9.2% in China compared to the strong first quarter of 2021; still, the positive information is that US sales grew by 3.7%.

Another positive information is that BMW sold 35,289 all-electric vehicles, which represents an increase of nearly 150% over the previous year.

BMW continues to focus on speeding up electric vehicle adoption, and sales momentum remains strong as demand for BMW iX and BMW i4 is constantly rising.

The company also unveiled the BMW i7 recently, an all-electric luxury sedan that underlines innovation leadership in electrification, digitalization, and autonomous driving. Nicolas Peter, Chief Financial Officer of BMW, said:

With lower economic expectations, supply chain issues, rising inflation, and high energy and raw material prices, we face growing uncertainties in our business environment. Despite these challenging conditions, the BMW Group made a strong start to 2022.

According to the company’s management, supply chain issues and higher raw material prices became the main limiting factor, which is likely to continue through the rest of 2022.

Because of this, the cost of sales in the Automotive segment has increased by more than 20% during the first quarter, but despite supply bottlenecks and inflation, the company’s management forecasted vehicle sales for the full year would be on par with last year.

Fundamentally looking, BMW trades at less than four times TTM EBITDA, the company has the ability to mitigate cost pressure vs. smaller peers amidst supply chain issues, and with a market capitalization of €51 billion, shares of this company are fairly valued.

€70 represents the current support level

Data source: tradingview.com

The current support levels are €70 and €65; €90 and €100 represent the current resistance levels. If the price jumps above €90, it would be a signal to trade BMW shares, and the next target could be around €100.

On the other side, if the price falls below €70, it would be a “sell” signal, and the next target could be €65.

Summary

Bayerische Motoren Werke AG reported solid first-quarter results this month, and the company continues to focus on speeding up electric vehicle adoption. Despite supply bottlenecks and inflation, the company’s management forecasted vehicle sales for the full year would be on par with last year.

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