Is It Too Late To Reassess Alstom (ENXTPA:ALO) After Its Recent Share Price Recovery?
- If you are wondering whether Alstom at €26.19 is attractively priced or not, this article will walk you through what the current market price may be implying about its value.
- The stock has posted returns of 4.1% over the last 7 days, 11.5% over 30 days, 1.9% year to date, 29.3% over 1 year and 12.1% over 3 years, while the 5 year return stands at a 39.0% decline.
- Recent headlines around Alstom have focused on the share price recovery over the past year and how sentiment has shifted after a difficult longer term period for holders. These developments help explain why the stock has risen over shorter time frames while the 5 year performance still reflects earlier weakness.
- Despite this mixed return profile, Alstom currently has a valuation score of 0/6. Next, we will look at how different valuation methods frame that score, and then finish with a broader way to think about what value could mean for you as an investor.
Alstom scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Alstom Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes estimates of the cash a company could generate in the future, then discounts those cash flows back to today to arrive at an estimate of what the business might be worth right now.
For Alstom, the latest twelve month free cash flow is a loss of €131.6 million. Analysts and model assumptions then project free cash flow turning positive and reaching €375 million by the financial year ending 2030. Across the 2026 to 2035 period, the model uses a mix of analyst estimates for the earlier years and extrapolated figures thereafter, all in €, within a 2 Stage Free Cash Flow to Equity framework.
When these projected cash flows are discounted back to today, the model arrives at an estimated intrinsic value of €9.32 per share. Compared to the current share price of €26.19, this implies the stock is 181.1% above the DCF estimate, so on this measure Alstom screens as expensive relative to its projected cash flows.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Alstom may be overvalued by 181.1%. Discover 884 undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Alstom Price vs Earnings
For profitable companies, the P/E ratio is a useful shorthand for how much investors are paying for each euro of current earnings. It ties the share price directly to the bottom line, which is often what ultimately matters for shareholders.
What counts as a normal P/E will usually reflect how the market views a company’s growth prospects and risk profile. Higher expected growth and lower perceived risk can support a higher multiple, while slower growth or higher risk tend to align with a lower one.
Alstom currently trades on a P/E of 39.54x. That sits above both the Machinery industry average of 24.06x and the peer average of 20.08x. Simply Wall St also calculates a Fair Ratio of 32.62x for Alstom. This is a proprietary estimate of what the P/E might be, given factors such as earnings growth expectations, profit margins, industry, market cap and company specific risks.
Compared to simple peer or industry comparisons, the Fair Ratio aims to give a more tailored view because it adjusts for Alstom’s own characteristics rather than assuming it should trade in line with the group.
With the current P/E of 39.54x above the Fair Ratio of 32.62x, Alstom screens as expensive on this metric.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Alstom Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, which let you write your own story for Alstom by linking what you think about its orders, margins and risks to a concrete forecast and fair value. You can then compare that fair value with today’s price to decide whether you see the stock as attractive or not, and watch that view update automatically as new earnings, guidance or news arrives. One investor might build a more optimistic Alstom Narrative that lines up with a fair value closer to the higher analyst target of €33.0, while another might take a more cautious stance and anchor their Narrative near the lower target of €9.0, all within the Community page that millions of investors already use.
Do you think there's more to the story for Alstom? Head over to our Community to see what others are saying!
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com