SAABY - SAAB: New Billion Dollar Orders Coming In But Is This Skyrocketing Valuation Reaching A Plateau?
2024-07-28 18:44:13 ET
Summary
- SAAB's stock has surged over 70% this year, driven by increased demand and profitability improvements.
- SAAB's Q2 highlights include strong performance in Dynamics, Kockums and Combitech segments, with a focus on international expansion.
- The Surveillance segment delivered lower than expected Q2 results.
- Risks include a potential decline in demand if peace agreements are reached in conflict zones, supply chain vulnerabilities, and regulatory complexities.
Introduction
SAAB was an uninteresting story until the Ukraine invasion. CFO Christian Luiga mentioned during an ACE CFO forum at the Stockholm School of Economics that institutional investors showed little to no interest in the military industry before 2022. In fact, the industry was seen as a detriment to ESG profiles that most funds aimed to achieve at the time, due to the negative wartime and environmental impact. However, the interest and stock development since then demonstrate how quickly perceptions can change. Since the start of the year, SAAB's stock has risen over 70% as of July 19th. The demand for SAAB’s products has surged across almost all offerings, with the order book doubling in the second quarter to SEK 40 billion ($3.7 billion) ( "High interest for Jas Gripen" | SvD ). Additionally, SAAB just received a new $6.6 billion order within the Surveillance and Dynamics business areas, even surpassing the total sales value of the Dynamics segment ($5.9 billion) for the first half of the year. The question now is whether this trend will last, and how much of the growth is already priced in—can SAAB maintain a sustainable growth trajectory coupled with profitability to meet the market's high expectations?...
SAAB: New Billion Dollar Orders Coming In, But Is This Skyrocketing Valuation Reaching A Plateau?