RBC double-upgrades Schneider Electric on more attractive valuation

March 19, 2025 07:55 PM AEDT | By Investing

Google News:

RBC double-upgrades Schneider Electric on more attractive valuation

Recent News

WA’s $250K Push for Aboriginal Business Leadership Signals Long-Term G...

Macmahon Secures $550M Facility to Streamline Financing and Support Gr...

Can Australia Navigate a Tax Reform Shake-Up? What It Means for ASX200

Lincoln Minerals Launches Geochronology Program to Refine Minbrie Copp...

Investing.com -- RBC Capital Markets has double-upgraded Schneider Electric (EPA:SCHN) to Outperform from Underperform, a move driven by recent stock underperformance that has led to more attractive valuation levels.

Shares in Schneider Electric underperformed their sector group by roughly 15% and by 12% against the European Electrical peer average, while at the same time, the company's earnings per share (EPS) momentum has turned positive.

“The result is a more attractive investment proposition for a company with a track record of above-peer organic growth that we expect to continue, supported by the electrification/datacenter mix in the portfolio,” RBC analysts led by Mark Fielding said in a note.

Following the recent underperformance, the company's stock is now trading at a discount compared to its peers, with a 2025 estimated enterprise value to earnings before interest, taxes, and amortization (EV/EBITA) multiple of approximately 17x, below the peer average of 18x.

RBC analysts suggest that a multiple in line with peer Eaton Corporation's (NYSE:ETN) 20x could support a valuation of €275 per share. Combining this with a discounted cash flow (DCF) analysis of €265 per share, RBC Capital has raised its price target for Schneider Electric from €225 to €270.

Schneider Electric has consistently outperformed its European electrical peers in organic growth over the past five years, with a rate of 7.4% compared to the peer average of 5.4%. RBC expects this trend to continue, with an 8% annual growth forecast over the next two years.

The company's Energy Management division, which makes up 82% of group sales, has been a significant driver of this growth.

Furthermore, Schneider Electric is poised to benefit from the expanding data center market. While data centers are projected to account for around 20% of the company's 2025 estimated sales, the demand for equipment in this sector is on the rise.

RBC’s tracker of capital expenditures by hyperscale data center operators shows a 30% increase over the last six months.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.