Bekaert Resuming share buybacks is great capital allocation
We have reduced our underlying EBIT forecasts for the FY24-26 period by 4-8% following last week's profit warning. Perhaps more important than the acknowledgment of a tougher macro environment, we welcome the decision to launch a € 200m share buyback program and expect Bekaert to turn back over 20% of the current market capitalization to investors over the next two years in the form of dividends and share buybacks. At 3.2x EV/EBITDA25e, buying back own shares seems an extremely compelling idea and we remind that Bekaert has the balance sheet strength to do so, with our forecasts including buybacks incorporating a return to a net cash position in the course of 2027. On the back of the attractive valuation and the ongoing operational & strategic improvements, we maintain our BUY rating with a slightly lowered target price of € 55 (down from € 58).Bekaert is a global technological and market company engaged in advanced solutions based in steel wire transformation and coatings as well as an independent manufacturer of drawn steel wire products. In addition, Co. teams up with customers and suppliers globally to develop, implement, upgrade, and protect both current and future technologies. Co.'s business activities are put in practice along two main axes: Product Innovation and Process Innovation. Product Innovation helps Co. better serve its customers, while Process innovation enables Co. to increase operational effectiveness, minimizing its impact on the environment.
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