Steyr Motors' (ETR:4X0) Promising Earnings May Rest On Soft Foundations

Ladies and gentlemen, buckle up! We've got a wild ride ahead as we dive into the latest earnings report from Steyr Motors (ETR:4X0). The headlines are screaming about a 9.2% revenue jump and a stunning turnaround from a €9.13 million loss to a €4.88 million profit. But hold onto your hats, because there's more to this story than meets the eye.

First, let's talk about the good news. Steyr Motors' revenue soared to €41.7 million, and their profit margin hit 12%. That's a massive improvement from last year's net loss. Earnings per share (EPS) also exceeded analyst estimates by 6.8%, which is a big win. But here's where things get tricky.



The company's shares are down 24% from a week ago, and there's a reason for that. Steyr Motors' free cash flow is a whopping €3.93 million short of its reported profit. That's right, folks—while the company is reporting a profit, the actual cash coming in is far less. This is a red flag that investors need to pay attention to.

Now, let's break down the numbers. Steyr Motors recorded an accrual ratio of 0.33, which means its free cash flow fell well short of covering its statutory profit. Over the twelve months to December 2024, the company produced free cash flow of €953k, falling well short of its reported profit of €4.88m. This discrepancy is a major concern, and it's something that investors need to be mindful of.



But wait, there's more! Steyr Motors' share price has been highly volatile over the past three months compared to the German market. This volatility is a reflection of investor concerns about the sustainability of the company's profitability. And with good reason—if the company can't improve its cash flow generation, it may face challenges in sustaining its profitability in the long term.

So, what's the bottom line? Steyr Motors' recent financial performance is impressive, but the underlying factors suggest that the company's profitability may not be as solid as it seems. The gap between reported profit and free cash flow is a major concern, and investors need to be cautious.

DO NOT MISS OUT on this opportunity to dive deeper into Steyr Motors' financials and make an informed decision. Stay tuned for more updates and analysis, and remember—when it comes to investing, knowledge is power!