It's unusual to find a quality industrial trading at a reasonable valuation these days, so the very reasonable valuation on Siemens (OTCPK:SIEGY) has me puzzled. I don't think my long-term revenue outlook for 4% growth is out of line relative to other quality automation, electrification, and healthcare plays like ABB (ABB), Eaton (ETN), Philips (PHG), and Schneider (OTCPK:SBGSY), and likewise, I don't think an outlook for long-term FCF margins in the low-to-mid teens is that bullish relative to peers, particularly considering Siemens' above-average leverage to software.
Operationally, I like a lot of what Siemens has been doing. Siemens was an early mover in the "de-conglomeritization" movement, and I think Siemens is stronger for having moved on from Osram and Siemens Energy while keeping a strong position in Siemens Healthineers (OTCPK:SMMNY). Although there are some areas where I think Siemens could upgrade its business (robotics, low-voltage, and building controls), I think Siemens is well-leveraged to a near-term recovery in industrial automation and a longer-term recovery in process automation, as well as longer-term trends like green electrification and mass transit.
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