Schneider Electric (OTCPK:SBGSY) (SU.PA)
has been one of my favorite companies to follow for a while now, and
better-than-peer results from the third quarter did that sentiment no
harm. Although it has taken some time for it to all come together,
Schneider has built a strong business that is outgrowing its end-markets
in both electrical and automation – two end-markets that I expect to be
outperformers over the long term. On top of that, management has made
some credible progress towards margin leverage that bodes well for the
future.
I like Schneider’s exposure to non-resi
construction, utilities, and a range of automation markets, and I love
the company’s recent track record of execution in its electrical and
automation markets. What I can’t love anymore is the price/valuation
trade off, as sentiment has shifted pretty significantly – aided, I’m
sure, by institutions flocking towards those industrials still managing
to show attractive growth in this growth-poor industrial landscape. The
price isn’t so unreasonable on an EV/EBITDA basis considering the
margin/return improvement trajectory, but I’d rather wait in the hopes
that this name cools off and another window of opportunity opens.
Continue reading here:
Schneider Electric Taking Improving Execution And Momentum Into 2020
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