Key Takeaways:
- Price Projection: Pirelli & C. S.p.A. stock could reach €7 by 2027 based on 2% revenue growth, 16% operating margins, and a 10x earnings multiple.
- Potential Gains: From a current price of €6, the €7 target implies 16% total upside over the next 2 years as earnings compound modestly.
- Annual Return: This setup translates into roughly 8% annualized returns, driven primarily by earnings growth rather than valuation expansion.
- Margin Profile: Operating margins near 16% remain above the 15% long-term average, reflecting disciplined pricing and premium tire mix resilience.
Pirelli & C. S.p.A. (PIRC) designs and manufactures premium tires for cars, motorcycles, and bicycles and generated about €7 billion in 2024 revenue across Europe, the Americas, and Asia, reflecting its global replacement-driven business.
Pirelli stock gained renewed attention in January 2026 after Italy signaled a new governance review tied to Sinochem’s 34% stake, a development that directly affects Pirelli’s strategic flexibility in the U.S. market.
In the most recent year, Pirelli delivered operating income of about €1 billion, supported by pricing discipline and premium product demand that kept operating margins close to 16%.
With a market capitalization of roughly €6 billion, Pirelli combines stable cash generation with modest revenue growth expectations of around 2% as replacement demand offsets slower global auto production.
Even with margins holding firm and earnings growing steadily, the stock trades near 10x earnings, leaving open whether governance uncertainty and muted growth are fully reflected in today’s valuation.
What the Model Says for PIRC Stock
We analyzed Pirelli & C. S.p.A. based on stable replacement demand, premium tire positioning, and steady cost discipline supporting predictable earnings through 2027.
Using 2.1% annual revenue growth, 16.1% operating margins, and a 9.7x exit P/E, the model points to a €7.36 target price.
That implies a 16.0% total return, or a 7.9% annualized return, over 1.9 years, ending at €7.36 with moderate upside.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for PIRC stock:
1. Revenue Growth: 2.1%
Pirelli generated about €7 billion in recent annual revenue, with historical growth averaging roughly 5% over five years, reflecting replacement demand stability rather than aggressive volume expansion.
Recent revenue trends show low growth near 2% as premium mix gains and pricing offset muted global auto production and cautious consumer demand across Europe and China.
Forward growth depends on high-end tire demand, electric vehicle penetration, and regional mix, while risks include softer OEM volumes and regulatory friction affecting US market access.
A 2.1% revenue growth assumption balances durable replacement demand and premium pricing against cyclical auto exposure and geopolitical constraints.
2. Operating Margins: 16.1%
Pirelli has sustained operating margins between roughly 15% and 17% over recent years, supported by premium brand positioning and disciplined cost control across manufacturing and distribution.
Current execution shows margins near 16% as pricing actions, mix improvement, and efficiency initiatives offset raw material volatility and energy cost normalization.
Margin upside depends on further premium mix gains and cost discipline, while downside risks stem from volume deleverage if global auto demand weakens more sharply.
A 16.1% operating margin reflects normalized profitability within Pirelli’s historical range without assuming cycle peak conditions.
3. Exit P/E Multiple: 9.7x
Pirelli has historically traded at earnings multiples between roughly 9x and 10x, consistent with a mature industrial profile and steady but unspectacular earnings growth.
Investor caution remains due to governance uncertainty, geopolitical scrutiny, and limited growth visibility, which cap valuation despite stable cash generation.
Multiple expansion would require clearer governance resolution and stronger growth signals, while contraction risk persists if regulatory or demand pressures intensify.
A 9.7x exit P/E assumes stable earnings quality and governance normalization without relying on sentiment-driven re-rating.
What Happens If Things Go Better or Worse?
Pirelli’s outcomes depend on global replacement tire demand, premium brand mix, and cost discipline, setting up a range of possible paths through 2029.
- Low Case: If replacement demand stays muted and OEM volumes remain soft, revenue grows around 1.6% with net margins stay nearing 9% → 1.8% annualized return.
- Mid Case: With premium mix holding and cost control remaining steady, revenue growth near 1.8% and net margins improving toward 9.5% → 6.2% annualized return.
- High Case: If premium tire demand strengthens and execution improves across regions, revenue reaches about 2.0% and net margins approach 9.7%→ 9.9% annualized return.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
