SBGSF - Schneider Electric: Record Results But Valuation Looks Stretched

2024-02-21 17:49:00 ET

Summary

• Schneider Electric delivered excellent financial results for the fiscal year 2023, surpassing company targets with +25% organic growth in adjusted EBITA.
• The company's star segment was Energy Management, with annual revenue growing ~14% organically.
• Schneider Electric is well-positioned to benefit from attractive end markets, including data centers, smarter buildings, industrial automation, and renewable energy infrastructure.
• The current valuation appears stretched, reflecting a significant premium over historical averages and potentially too much investor optimism.

It has been a little over a year since the last time we covered Schneider Electric S.E. ( OTCPK:SBGSF )( OTCPK:SBGSY ), a company we admire and believe benefits from significant structural tailwinds. The company was impressed with record results last time, including very strong guidance, and it has indeed delivered excellent financial results for fiscal year 2023 and strong forward guidance. In fact, adjusted EBITA growth for 2023 surpassed company targets, with +25% organic growth....

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