reports
- Denise Molina
Sandvik Posts Solid 1Q Mainly Due to Machining
Sandvik posted solid first-quarter results. Comparable year-ago figures will be less flattering for the remainder of the year, likely leading to slower growth; nonetheless, we anticipate making adjustments to our full-year forecasts, with potentially up to a 5% upward impact to our SEK 93.50 and $11.90 fair value estimates for the local and ADR shares, respectively. We retain our no-moat rating and find the shares overvalued. Looking through to the divisions, machining (insert metal cutting) was...
- Denise Molina
Sandvik Earnings Hitting All the Marks, but for How Much Longer?
Sandvik's 2017 revenue and orders grew by 10%-15%, and its EBIT margin expanded 260 basis points to 16.1%, raising the question of how sustainable the performance is. We see a risk of a natural slowdown in revenue growth in the next 12-24 months from moving further into the economic cycle and with tougher comparable figures. We believe Sandvik is close to peak margins, benefiting from a volume rebound that has elevated production facility utilisation levels. With shares up 24% in the past 52 wee...
- Denise Molina
Sandvik's end markets show signs of a return to industrial capital spe...
Sandvik's third quarter turned out organic revenue and EBIT growth of 12% and 28%, respectively, continuing the double-digit growth of previous quarters this year. The growth came on the back of weak year-ago comparables and was supported by a rebound in commodity-price-sensitive sectors, such as mining. Throughout 2014-16, Sandvik's organic revenue declined, with the trough finally coming in the fourth quarter of 2016. With tougher comps ahead, and Sandvik's most important commodities like co...
- Denise Molina
Sandvik's 3Q Benefits From Easy Comps
Sandvik's third quarter turned out organic revenue and EBIT growth of 12% and 28%, respectively, continuing the double-digit growth of previous quarters this year. The growth came on the back of weak year-ago comparables and was supported by a rebound in commodity-price-sensitive sectors, such as mining. Throughout 2014-16, Sandvik's organic revenue declined, with the trough finally coming in the fourth quarter of 2016. With tougher comps ahead, and Sandvik's most important commodities like co...
- Denise Molina
Atlas Copco's Operating Leverage and Vacuum Pumps Continue to Yield Go...
High operating leverage helped narrow-moat Atlas Copco's third-quarter results surprise on the upside on margins. Around 9% year-to-date volume growth across its portfolio of mining, tooling, and excavation equipment has expanded the company's nine-month EBIT margin by 180 basis points year over year. Nine-month sales growth matched the volume increase, as the company has not increased prices across most of its divisions since 2015. We expect to make changes to our model with an impact of no mor...
- Denise Molina
Sandvik's end markets show signs of a return to industrial capital spe...
Sandvik's first-half revenue was up 7% organically, while its EBIT margin expanded by 220 basis points year over year--overall a strong result relative to our expectations. Spending in its previously weak end markets, mining and energy, has come back, with 2017 favoured by easy comps, as revenue in the first half of 2016 was down 5% on an organic basis. Â We do not expect next year and medium-term growth to continue at the current pace. The shares look expensive, trading at 19 times the 2017 con...
- Denise Molina
Sandvik Posts Solid 2Q, Although Rising Metal Prices Steal Some of the...
Sandvik's first-half revenue was up 7% organically, while its EBIT margin expanded by 220 basis points year over year--overall a strong result relative to our expectations. Spending in its previously weak end markets, mining and energy, has come back, with 2017 favoured by easy comps, as revenue in the first half of 2016 was down 5% on an organic basis. Â We do not expect next year and medium-term growth to continue at the current pace. The shares look expensive, trading at 19 times the 2017 con...
- Denise Molina
We Would Like to See One More Quarter Before Getting Too Excited About...
While Sandvik’s first-quarter 2017 double-digit order book growth looks impressive, the assistance of one-off drivers in achieving that growth makes us reluctant to change our full-year forecasts just yet. The order book, which can give visibility on the next quarter, was up 16% on price and volume year over year. Roughly 40% of the order book comes from the machining tools segment, whose 10% order book growth was closer to 4% or 5% when adjusting for extra working days. In mining and rock, wh...
- Denise Molina
Sandvik's end markets show signs of a return to industrial capital spe...
With a handful of major European industrials now having reported, it looks like general industrial equipment spending picked up at the end of the fourth quarter across different end markets, including energy. No-moat Sandvik’s 2016 5% revenue decline was in line with our forecasts, and its 13.5% adjusted EBIT margin modestly better. However, it ended 2016 with a book/bill above 1 in long-time struggling divisions like mining and rock excavation. We are increasing our medium-term forecasts with...
- Denise Molina
Sandvik's end markets show signs of a return to industrial capital spe...
With a handful of major European industrials now having reported, it looks like general industrial equipment spending picked up at the end of the fourth quarter across different end markets, including energy. No-moat Sandvik’s 2016 5% revenue decline was in line with our forecasts, and its 13.5% adjusted EBIT margin modestly better. However, it ended 2016 with a book/bill above 1 in long-time struggling divisions like mining and rock excavation. We are increasing our medium-term forecasts with...
- Denise Molina
Sandvik's 2016 Indicates a Pickup in Industrial Equipment Spending; Sh...
With a handful of major European industrials now having reported, it looks like general industrial equipment spending picked up at the end of the fourth quarter across different end markets, including energy. No-moat Sandvik’s 2016 5% revenue decline was in line with our forecasts, and its 13.5% adjusted EBIT margin modestly better. However, it ended 2016 with a book/bill above 1 in long-time struggling divisions like mining and rock excavation. We are increasing our medium-term forecasts with...
- Denise Molina
Sandvik's 3Q Reveals Good Margin Improvement but a Mixed Recovery in E...
Sandvik’s third-quarter results were in line with our expectations, but the underlying demand showed a mixed picture in its order book recovery. We continue to view the shares as richly valued and retain our no-moat rating and SEK 70 and USD 8.10 per ADR fair value estimates. At face value, we detected two bright spots in the results: first, a flat year-over-year order book, and second, an operating income margin improvement of 80 basis points, reaping the benefits of the company’s restruct...
- Denise Molina
Sandvik Is Adjusting for Divestiture of Loss Making Assets; Increasing...
We are increasing our fair value estimate for Sandvik to SEK 78 for the local and $8.10 for the ADR to adjust for the divestiture of its mining system assets. Our previous fair value estimates were SEK 50 for the local shares and $5.90 for the ADR. We view the shares as overvalued. Our new fair value estimate implies a 16 times P/E, which we think is fair given the company’s cyclical exposure and our high uncertainty rating. We are maintaining our no-moat and stable trend ratings, due to the c...
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