Volkswagen (XTRA:VOW3) Could Be 17% Undervalued As Losses Reset Expectations

Volkswagen (XTRA:VOW3) has been thrust into focus after reporting a third quarter net loss of €4,410 million on €75,277 million in sales, a wider setback than the prior year.

Volkswagen's latest results land after a tough stretch for shareholders, with the year-to-date share price return down 34.05% and the 1-year total shareholder return falling 17.03%. At the same time, the 1-day and 7-day share price gains suggest only tentative near term support.

Scan how Volkswagen's setback compares with other auto businesses under pressure by reviewing our hand picked 200 high quality undervalued stocks , which currently screen as both financially strong and potentially mispriced.

After a year marked by losses, restructuring plans and a sharply weaker share price, Volkswagen now trades on far lower expectations. Does the balance of risk and potential reward still lean toward buyers at this level?

Most Popular Narrative: 17% Undervalued

Volkswagen last closed at €70.20, while the most followed narrative on Simply Wall St sees fair value closer to €84.54, so the market is pricing in a lot of caution despite that gap.

The German car behemoth might not have reached my erstwhile calculus eventually; still, the magnetic pull of the roughly 70 Euros per share I had deemed fair back in March of last year has become ever more evident, with each month passing by.

Yet now that the board of Volkswagen has agreed on the tough reforms necessary to turn its fortunes around, the bottom should be in. That doesn't make the shares an outright buy, mind; but at least, the times of profitable short-selling should be over, rendering the OEM a classic hold until the evidence is in that it can prevail against the Chinese onslaught on its home turf.

See why 15 investors see Volkswagen as 17% undervalued .

Result: Fair Value of €84.54 (UNDERVALUED)

Still, several pressure points could flip this Volkswagen narrative, including further setbacks in China exposure or slower than expected progress on EV model competitiveness.

Find out about the key risks to this Volkswagen narrative .

Next Steps

The narrative around Volkswagen is split between concern about risks and optimism about potential upside. Use this as a prompt to move quickly and form your own view by weighing the 3 key rewards and 4 important warning signs .

Looking for more investment ideas beyond Volkswagen?

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