Morningstar | Vestas Reports Solid 3Q Results; Maintaining Fair Value Estimate
Vestas posted solid third-quarter results in line on revenue but slightly better than expected on operating profit . Management maintained its revenue and EBIT outlook but increased its expected investments by EUR 100 million to EUR 600 million with more spend on R&D and blade investments. We believe the company's guidance is achievable and do not expect to make material changes to our forecasts. We maintain our no-moat rating and DKK 570 fair value estimate.The order intake continued to accelerate versus last year, rebounding from the decline in the fourth quarter of 2017 and first quarter of this year. For the first nine months orders were up 19% year over year, moderately outpacing the 16% growth of 2017. In line with the second quarter, the Americas continues to drive most of the growth this year with a 36% growth in the order book in the first nine months, while Asian orders declined by 16%, facing tough comparables after last year's 64% order growth.
Revenue grew by 14% organically (2% on a reported basis) in the third quarter. The EBIT margin was down 310 basis points year over year to 9.8% in the third quarter, with margin hit by project pricing in Power Solutions. However, our forecasts and guidance already account for a drop in margin in 2018 versus 2017.
Vestas Wind Systems is an industrial machinery and equipment manufacturing company based in Denmark. Co. is engaged in the production of wind turbines. Co.'s main activities comprise development, manufacture, sale, marketing and maintenance of installations that use wind energy to generate electricity. Co. supplies products, from individual turbines to the delivery of turnkey wind power installations globally. Co. supplies guidance services to its customers in connection with the development, financing and ownership of wind turbine projects. Co.'s main customers are utilities and energy companies.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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