On Tuesday, CFRA, a notable investment research firm, increased its price target for Thyssenkrupp AG (ETR:TKAG) (TKA:GR) (OTC: TYEKF), a German multinational conglomerate, to €4.00, up from €3.50. Despite the raised target, the firm has decided to maintain a Hold rating on the stock.
The adjustment in the price target comes after a detailed sum-of-the-parts valuation by CFRA. The firm also revised its earnings per share (EPS) estimate for the fiscal year ending in September 2025 to €0.80, up from the previous estimate of €0.75. Furthermore, CFRA has initiated its EPS forecast for fiscal year 2026 at €0.97.
Thyssenkrupp's adjusted earnings before interest and taxes (EBIT) for fiscal year 2024 experienced a 19% decline, totaling €567 million. This was primarily due to weaker pricing and sales volumes in the company's major divisions, leading to a net sales decrease of €2.5 billion. Despite these setbacks, Thyssenkrupp has provided guidance for fiscal year 2025, projecting an adjusted EBIT between €0.6 billion and €1.0 billion. This optimistic forecast is based on expected strong margin improvements in its Decarbon Technologies and Steel Europe segments.
However, CFRA anticipates that Thyssenkrupp will face negative free cash flow, as capital expenditures are likely to surge by more than 20% year-over-year. This increase is attributed to the construction of the company's Direct Reduced Iron plant.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Thyssenkrupp's financial position and market performance. The company's market capitalization stands at $2.51 billion, with a price-to-book ratio of 0.19 as of the last twelve months ending Q3 2024. This low P/B multiple aligns with one of the InvestingPro Tips, suggesting that the stock might be undervalued relative to its book value.
InvestingPro Tips also indicate that Thyssenkrupp holds more cash than debt on its balance sheet, which could provide some financial flexibility as the company navigates its capital expenditure plans and potential negative free cash flow, as mentioned in CFRA's analysis. However, another tip notes that the company is quickly burning through cash, which investors should monitor closely given the projected increase in capital expenditures.
While CFRA has raised its EPS estimates, it's worth noting that InvestingPro data shows Thyssenkrupp was not profitable over the last twelve months, with a negative P/E ratio of -0.85. Nevertheless, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, which could support CFRA's more optimistic outlook for fiscal years 2025 and 2026.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Thyssenkrupp's financial health and market position.
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