On May 31 the Financial Times published an interesting article on Renault called Renault: carmaker is running on empty (free registration may be required)

The article describes how the share price of Renault has underperformed the auto sector by 66% over the last 10 years.

Quite a performance.

But this has made the company’s shares very cheap.

According to Morningstar the company is valued as follows:

Price to Earnings ratio: 3,1
Expected Price to Earnings ratio: 4,6
Price to Book ratio: 0,5
Price to Cash flow: 5,3

I think you will agree it looks cheap. But it has been like that for a long time.

What really caught my eye in the Financial Times article thought was this calculation:

If you subtract the market value of Renault’s investments in Nissan, Avtovaz of Russia, Daimler and Volvo, the remaining value for Renault (the French carmaker) is minus €15 a share.


This means if Renault sells all its investments in other car companies, just these are worth €15 per share more than what the Renault share price is at the moment.

Not a bad idea for a patient investor.