Alstom share price collapsed as woes mount: avoid this dip

November 15, 2023 04:41 AM PST | By Invezz

Alstom share price collapsed as woes mount: avoid this dip — Image source: Invezz

New capital raise ahead

Alstom, the giant train maker, has been one of the worst-performing companies in the CAC 40 index this year. Like other industrial companies in Europe, the company is facing numerous headwinds as inflation remains high and growth fades.

The company published its financial results on Wednesday that confirmed it was not doing well. As a result, it will start layoffs that will impact about 1,500 employees. At the same time, it warned that it could raise cash by selling shares in a bid to reduce its huge debt. Its goal is to slash its net debt by €2 billion by 2025.

Alstom’s orders received in the half year came in at €8.4 billion, down from the €10 billion it had in the last financial year. Its total sales jumped to €8.4 billion while the adjusted EBIT rose to €438 million. However, its free cash outflow jumped to over €1.1 billion from the previous €45 million. The CEO said:

“The negative free cash flow of Alstom during this first half is a clear call for change. While demand remains sustained, our commercial performance has been soft. The Bombardier Transportation integration continues to progress. However, the delivery of Aventra program has been more complex than anticipated.”

Alstom’s woes are in line with other European industrial companies. For example, Siemens Energy, a leading manufacturer of wind turbines, received a bailout from the government and its parent company this week.

The most recent data by S&P Global showed that the European manufacturing PMI remained below 50, a sign that it was in a contraction mode. In France, the manufacturing PMI dropped to 42.6 in October, the lowest level since 2020.

Alstom faces more headwinds ahead. Its margins are still thin while competition in the train manufacturing is rising. It competes with the likes of CRRC, CAF, Hyundai, and Siemens. Therefore, the company’s stock will likely remain under pressure in the coming months.

Alstom share price forecast

The daily chart shows that the Alstom stock price formed a double-top pattern at €28.16 between February and June of this year. This pattern is one of the most bearish ones in the market. It moved below that neckline of €20.50 as it plunged by over 38% in October.

Alstom share price remains below all moving averages as it sits at its all-time low. Therefore, it is a bit difficult to buy the dip now that the company has hinted that it will raise capital by selling the stock soon. I suspect that the company’s turnaround will take time.

The post Alstom share price collapsed as woes mount: avoid this dip appeared first on Invezz

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