Assessing Alstom (ENXTPA:ALO) Valuation After Fresh €3.4b Rail Contract Wins
Alstom (ENXTPA:ALO) has just reported three fresh rolling stock wins worth about €2.5b across the Americas and Europe, adding to a recent €920 million Mexico contract that has put the stock back on investor radar.
See our latest analysis for Alstom.
The fresh contract wins appear to have fed into stronger momentum, with a 30-day share price return of 16.78% and a 90-day share price return of 19.53%, while the 1-year total shareholder return of 20.55% contrasts with a 5-year total shareholder return of 37.94%.
If these contract announcements have you watching rail closely, it could also be a good moment to scan aerospace and defense stocks for other transport and infrastructure related ideas.
With rolling stock orders of about €3.4b landing in quick succession, the share price has moved sharply. The key question now is whether Alstom still trades below its fundamentals or if the market already prices in future growth.
Most Popular Narrative: 13.3% Overvalued
With Alstom last closing at €26.87 against a narrative fair value of €23.72, the current price sits above what this framework suggests.
The analysts have a consensus price target of €23.06 for Alstom based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €33.0, and the most bearish reporting a price target of just €9.0.
Want to see what sits behind that spread in expectations? The narrative leans heavily on steady revenue gains, rising margins and a lower future earnings multiple than today.
Result: Fair Value of €23.72 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, supply chain delays and low margin legacy contracts still sit in the background, and either could quickly challenge the current optimism if they resurface.
Find out about the key risks to this Alstom narrative.
Build Your Own Alstom Narrative
If you see the data differently or prefer to test your own assumptions, you can build a custom Alstom view in minutes: Do it your way.
A great starting point for your Alstom research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
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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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