Home 180523 TomTom | Automotive to accelerate Free Cash Flow
180523 TomTom | Automotive to accelerate Free Cash Flow

180523 TomTom | Automotive to accelerate Free Cash Flow

No. pages 32

In 2012 TomTom decided to change its strategy of its Automotive division by ceasing the development of complete in-dash navigation systems and focus solely on the software applications. Besides the strategic adjustment TomTom started to disclose the annual order intake of the Automotive division as well. Despite the fact that these were impressive - with book-to-bill ratio's well over 2 - revenues remained virtually unchanged in the first years. In the past two years the first benefits of its updated strategy became visible.

In this note we will focus on TomTom's Automotive division in particular. Firstly, we are intrigued by the strong order intake of the past five years which - at first sight - has not contributed a lot to the company's profit & loss account.

Secondly, following the adoption of IFRS 15 'Revenue from Contracts with Customers' the company's valuation multiples should be weighted differently.

On the back of clients' request we'll dive deep into this theme and will spend most pages on Automotive and the way we believe TomTom should be valued nowadays.

After we have discussed the Automotive division, we will briefly touch upon the main developments within the other segments Enterprise, Telematics and Consumer.

Once we reviewed all business unit we will execute our DCF model and present are target price for TomTom.

Lastly we will draw our conclusions and investment opinion.


1 introduction
2 TomTom at a first glance
3 Automotive on the eve of strong cash flow generation
4 Enterprise to suffer from weak US Dollar
5 Telematics to continue its strong organic growth
6 Consumer to pressure revenues but not profits
7 transition to accelerate
8 valuation
9 summary and conclusions

Created Date: Wednesday May 23, 2018 16:30:43
Last Updated Date: Wednesday May 23, 2018 16:30:43
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