TLDR
- BMW stock rose over 6% after Q1 results beat analyst expectations on margins and cash flow
- Pre-tax profit of €2.3B topped the €2.2B consensus, despite a 25% year-on-year drop
- Automotive EBIT margin came in at 5%, above the forecast 4.7%
- Automotive free cash flow nearly doubled to €777M as capital spending fell sharply
- BMW maintained its full-year guidance of a 4–6% automotive EBIT margin
BMW reported Q1 2026 pre-tax profit of €2.3 billion, beating analyst consensus of €2.2 billion. The stock responded sharply, climbing more than 6% on Wednesday to trade around €82.
BMW kept its 2026 outlook unchanged, with strong Europe demand helping offset weakness in China.
Its auto EBIT margin was 5% in Q1, while the company said order intake in Europe hit a record.
BMW also said tariffs will cut its auto margin by about 1.25 points this year. pic.twitter.com/QKC71rUg5V
— Wall St Engine (@wallstengine) May 6, 2026
Group revenue fell 8.1% to €31 billion, and EBIT dropped 36% year-on-year to €2 billion. Those are ugly headline numbers — but investors looked past them.
The core automotive segment was the bright spot. Its EBIT margin hit 5.0%, topping the analyst forecast of 4.7% and sitting comfortably within BMW’s full-year target range of 4–6%.
Bayerische Motoren Werke AG, BMW.DE
The motorcycles unit also outperformed, posting an 11.4% margin.
Free cash flow was the other standout figure. Automotive free cash flow nearly doubled to €777 million, helped by a steep drop in capital expenditure — from €2.83 billion a year ago to €1.73 billion — as investment in new EV platforms began to level off.
BMW said it expects full-year automotive free cash flow to exceed €4.5 billion.
The financial services division was the weakest part of the report. Profit before tax there fell 41% to €381 million, hit by a provision tied to a UK motor finance compensation scheme. Analysts largely treated the charge as a one-off.
Vehicle Sales Under Pressure
Global deliveries fell 3.5% to around 566,000 units in Q1. China remains the toughest market — sales there dropped 12.5% in 2025, and BMW expects volumes to stay broadly flat in 2026.
Battery electric vehicle volumes fell 20% in the quarter, reflecting shifting demand and subsidy changes in key markets.
US deliveries of BMW and MINI fell 4.3% to 90,492 units. US import tariffs of 25% on European vehicles are a headwind, though BMW’s Spartanburg plant in South Carolina provides some buffer.
Its Chinese-made Mini models remain exposed to EU anti-subsidy levies, adding costs in the low hundreds of millions of euros.
Valuation and Analyst Views
At current levels, BMW trades at roughly 6.4 times trailing earnings. Its 52-week range runs from €70.94 to €97.92, leaving it well off its peak.
A dividend of €4.40 per share is expected, with the stock going ex-dividend on May 14 — implying a yield of around 5.7% at current prices.
Morgan Stanley reiterated an overweight rating, pointing to improving cash generation and a solid margin outlook.
JP Morgan also holds an overweight rating with a price target of €100. RBC Capital Markets sits at hold with an €84 target, flagging raw material costs and currency risks.
Bernstein maintained a buy rating on May 4. The analyst consensus price target stands at €91.59, with 10 buys and four sells among covering analysts.
BMW maintained its full-year guidance, forecasting a further 5–9.9% decline in group pre-tax profit from the €10.2 billion recorded in 2025.
Mercedes-Benz reports its own Q1 2026 results shortly, which will offer a direct comparison on how German premium manufacturers are managing the same tariff and China headwinds.
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