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Renault to Post $11B Losses After Nissan Stake Revaluation
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Key Takeaways
Renault will record $11B losses after revaluing its 35.7% stake in struggling Nissan.
The move reflects Nissan's share price amid ongoing losses and fading joint operations with Renault.
RNLSY says the non-cash loss won't impact its full-year guidance, dividends, or strategic ties with Nissan.
Renault SA (RNLSY - Free Report) has announced that it will recognize losses of $11 billion in the first half of 2025 to clearly reflect its current stake in Nissan Motor (NSANY - Free Report) . France-based automaker Renault currently owns 35.7% of Nissan, with 17.05% held directly and the remainder through a trust. As Nissan has been struggling with declining sales, outdated product lines and Trump’s tariff policies, Renault has gradually loosened ties. As Renault’s valuation of its investment in the Japanese automaker was well above its share price, it has now decided to reflect the value of holding directly in equity based on Nissan’s share price.
Following Nissan’s inability to recover from the crisis sparked by the 2018 removal and arrest of former chairman Carlos Ghosn, combined with recent struggles due to the emergence of electric vehicles, Renault has been lowering its stakes after two long decades of partnership. Renault now partners with Nissan only in specific projects instead of large integrations. Nissan’s reported loss of $4.5 billion for the financial year ending March and its suspended forecast for the current year also raise concerns.
The adoption of a new accounting method, although it results in a significant non-cash loss, will benefit Renault by reducing volatility in its earnings without causing fluctuations in full-year guidance or dividend payouts.
Renault will delay its payments to suppliers as it has to free up short-term funds. Nissan continues to navigate its way through existing pressures while also being on the lookout for a new CEO. Meanwhile, the strategic and operational commitments between the Renault Group and Nissan will remain the same.
Shares of RNLSY and NSANY have slumped 9.6% and 30.7%, respectively, over the past year compared with the industry’s 16.3% decline.
Image Source: Zacks Investment Research
RNLSY’s Zacks Rank & Key Picks
RNLSY and NSANY currently carry a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for RACE’s current-year earnings is pegged at $9.89 per share, indicating a 7.97% year-over-year rise.Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 10.75%. RACE’s shares have gained 18.1% in the past year.
The Zacks Consensus Estimate for Luminar’s 2025 loss is pegged at $4.29 per share, indicating an improvement of 53.57% from year-ago levels. The company’s earnings beat the consensus estimate in each of the trailing four quarters, with an average surprise of 11.79%.
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Renault to Post $11B Losses After Nissan Stake Revaluation
Key Takeaways
Renault SA (RNLSY - Free Report) has announced that it will recognize losses of $11 billion in the first half of 2025 to clearly reflect its current stake in Nissan Motor (NSANY - Free Report) . France-based automaker Renault currently owns 35.7% of Nissan, with 17.05% held directly and the remainder through a trust. As Nissan has been struggling with declining sales, outdated product lines and Trump’s tariff policies, Renault has gradually loosened ties. As Renault’s valuation of its investment in the Japanese automaker was well above its share price, it has now decided to reflect the value of holding directly in equity based on Nissan’s share price.
Following Nissan’s inability to recover from the crisis sparked by the 2018 removal and arrest of former chairman Carlos Ghosn, combined with recent struggles due to the emergence of electric vehicles, Renault has been lowering its stakes after two long decades of partnership. Renault now partners with Nissan only in specific projects instead of large integrations. Nissan’s reported loss of $4.5 billion for the financial year ending March and its suspended forecast for the current year also raise concerns.
The adoption of a new accounting method, although it results in a significant non-cash loss, will benefit Renault by reducing volatility in its earnings without causing fluctuations in full-year guidance or dividend payouts.
Renault will delay its payments to suppliers as it has to free up short-term funds. Nissan continues to navigate its way through existing pressures while also being on the lookout for a new CEO. Meanwhile, the strategic and operational commitments between the Renault Group and Nissan will remain the same.
Shares of RNLSY and NSANY have slumped 9.6% and 30.7%, respectively, over the past year compared with the industry’s 16.3% decline.
Image Source: Zacks Investment Research
RNLSY’s Zacks Rank & Key Picks
RNLSY and NSANY currently carry a Zacks Rank #3 (Hold).
A few better-ranked stocks in the auto space are Ferrari N.V. (RACE - Free Report) and Luminar Technologies (LAZR - Free Report) . While RACE currently sports a Zacks Rank #1 (Strong Buy), LAZR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RACE’s current-year earnings is pegged at $9.89 per share, indicating a 7.97% year-over-year rise.Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 10.75%. RACE’s shares have gained 18.1% in the past year.
The Zacks Consensus Estimate for Luminar’s 2025 loss is pegged at $4.29 per share, indicating an improvement of 53.57% from year-ago levels. The company’s earnings beat the consensus estimate in each of the trailing four quarters, with an average surprise of 11.79%.