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Siemens AG ADR - Stock Quote SIEGY

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Morningstar's Siemens AG ADR Stock Analysis

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Looking Past One-Off Impact, Siemens Fiscal Q2 Indicates Market Share Gain and Good Cash Management

Analyst Note

| Denise Molina, CFA |

We believe the selloff of 6% (at the time of writing) for Siemens shares after reported fiscal second-quarter results presents a buying opportunity. The selloff likely came from concerns over the reported 200-basis-point year-over-year decline in profit margin to 18% for the narrow-moat firm's digital industries segment (automation solutions). However, the decline was due to a mix of one-off effects: 50 basis points related to exiting Russia, 30 basis points from bonus accrual to salespeople exceeding order targets and 100 basis points for the timing differences in automation software for customers transitioning from premise to cloud-based or SAAS contracts. SAAS transition is in an early phase and will be multiyear but ultimately benefits the firm's cash flow profile by increasing the portion of recurring revenue. Siemens also announced it would exit Russia (after 170 years in the market), leading to a 40-basis-point group-level profit margin and 100-basis-point mobility segment-level profit margin impact. We maintain our EUR 145 fair value estimate for Siemens. 

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Siemens AG ADR's Company Profile

Business Description

Siemens AG is an industrial conglomerate, with businesses selling components and equipment for factory automation, railway equipment, electrical distribution equipment, and medical equipment. Its separately listed business units include Siemens Healthineers, Siemens Energy, and Siemens Gamesa, which supply medical imaging equipment, power generation, and wind turbines, respectively.

Werner-von-Siemens-Strabe 1
Munich, BY, 80333, Germany
T +49 8938035491
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Mar 31, 2022
Fiscal Year End Sep 30, 2022
Stock Type
Employees 305,000

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