Siemens Energy (XTRA:ENR) Valuation After Activist Push to Spin Off Underperforming Wind Business
Ananym Capital’s new activist stake in Siemens Energy (XTRA:ENR) and its call to spin off the troubled wind arm has pushed the stock back into focus, as investors reassess where future value really lies.
See our latest analysis for Siemens Energy.
The activist pressure lands on a stock that already has strong momentum, with a 30 day share price return of 16.06 percent and a year to date share price gain of 143.12 percent. The three year total shareholder return of 604.27 percent shows how dramatically sentiment has flipped as investors price in both restructuring potential and improving earnings quality.
If this kind of turnaround story has your attention, it could be worth scanning aerospace and defense stocks for other industrial names where shifting demand and strategy might be setting up the next leg of growth.
Yet with the shares now trading slightly above the average analyst target and the balance tilting toward higher margin gas and grid businesses, is Siemens Energy still mispriced, or are markets already baking in the next wave of growth?
Most Popular Narrative: 3.1% Overvalued
With Siemens Energy closing at €123.60 versus a narrative fair value of about €119.92, expectations for future growth are running slightly ahead of that fair value line.
Leadership positions in grid technologies and gas turbines (with ongoing capacity expansion, positive pricing power, and increasing service revenues) are likely to sustain or improve profit margins and recurring earnings as long term service agreements and modernization projects become a greater share of the business.
Curious how strong grid and gas tailwinds can still point to a premium valuation, even after applying a near single digit discount rate and ambitious profit ramp assumptions? Read on to see the earnings, margin, and growth trajectory this narrative believes Siemens Energy must hit to justify that price tag.
Result: Fair Value of €119.92 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, continued record high orders and a faster Siemens Gamesa turnaround could support stronger, more durable earnings than this slightly overvalued narrative implies.
Find out about the key risks to this Siemens Energy narrative.
Build Your Own Siemens Energy Narrative
If this perspective does not quite align with your own, or you would rather dig into the numbers yourself, you can craft a personalised view in just a few minutes: Do it your way
A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Siemens Energy.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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