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Schneider Electric stock to 'take a breather' after 'underwhelming' earnings, guidance

Published 02/15/2024, 05:03 AM
Updated 02/15/2024, 05:06 AM
© Reuters.  Schneider Electric stock to 'take a breather' after 'underwhelming' earnings, guidance
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Shares of Schneider Electric (EPA:SCHN) (SBGSY) rose more than 3% in Paris on Thursday after the energy and automation digital solutions provider reported better-than-expected organic revenue growth for FQ4 2024 and released an upbeat 2024 guidance.

The company’s organic revenue grew by 9.1% in the fourth quarter, surpassing the consensus estimate of 7.44%. Total revenue came in at €9.48 billion, slightly below the expected €9.58 billion.

For the full fiscal 2023, adjusted EPS increased to €7.26 from last year's €7.11, but missing the consensus projection of €7.68.

Revenue rose by 5.1% year-on-year to €35.90 billion, slightly below the anticipated €36.05 billion.

Adjusted EBITA reached €6.41 billion, marking a 6.6% increase from the previous year and exceeding the forecast of €6.33 billion. Moreover, the adjusted EBITA margin improved to 17.9% from 17.6%, also above the estimated 17.6%.

Looking ahead to 2024, Schneider Electric expects organic revenue growth of between 6% and 8%, compared to the 6.5% expected by analysts.

The company also forecasts an adjusted EBITA margin of between 18% and 18.2%, slightly short of the consensus estimate of 18.3%.

Schneider anticipates a currency impact on revenue ranging from €400 million to €500 million this year, based on current exchange rates.

Analysts at Jefferies found the company’s results and guidance “quite underwhelming,” given the usual great expectations.

“The new guidance looks solid but leaves 1% downside to cons at the mid-point given slightly weaker margin forecasts. After shares have rallied hard in recent weeks, so have expectations,” analysts wrote.

“Unless mgmt can pull a rabbit out of the hat indicating that there is for example huge conservatism baked into the guide, this will unlikely be good enough today after shares have been consistently hitting ATHs and are up 8% vs the sector the past month alone,” they said.

“And while mgmt precisely targets a 6-8% range, the margin guidance likely leaves markets slightly underwhelmed. As such we think its fair that shares take a little breather here.”

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