Numbers

The Numbers

Siemens Energy trades like a repaired crisis asset that the market now values as a scarce electrification and power-infrastructure bottleneck: orders, backlog, and free cash flow have overwhelmed the old Siemens Gamesa fear, but a 3.9x EV/revenue multiple and roughly 36x EV/EBITDA leave little room unless FY26 margin guidance and free cash flow pre tax near €8.0B hold. The single metric most likely to rerate or derate the stock is backlog-to-cash conversion in Gas Services and Grid Technologies, because that decides whether today's record orders become durable earnings or just advance-payment timing.

What Is It Economically?

This is a project-and-service energy technology company: Gas Services and Grid Technologies now carry the economics, Transformation of Industry adds steadier industrial exposure, and Siemens Gamesa is still the drag that can make group margins look worse than demand conditions suggest.

Gas Services and Grid Technologies are the profit pool; Siemens Gamesa is still more than a quarter of revenue but negative on profit before special items.

Backlog is almost four times TTM revenue, which is why investors are underwriting visibility rather than just last year's income statement.

Revenue has compounded at 7.3% since FY2020, but the real inflection is that FY2024-FY2025 operating profit turned positive after the FY2023 Gamesa reset.

FY2025 free cash flow margin of 10.5% is much stronger than the 4.3% net margin, mostly because order momentum pulled in customer cash.

Orders stayed above revenue through Q2 FY26 preliminary results; H1 FY26 orders of €35.4B were up about 26% year over year.

Is It Healthy?

The business is healthier than the 2023 crisis narrative, but not yet a clean compounder: cash is real, leverage is contained, and the credit story has healed, while working capital and the wind turnaround still decide how much of the order book belongs to shareholders.

The balance sheet can support growth, but the low current ratio and very high cash conversion are both tied to project advances, so the quality test is whether margins follow the cash.

Trailing five-year FCF to net income is not meaningful because cumulative net income is negative; in the positive-profit FY2024-FY2025 window, FCF was 181% of net income, helped by customer advances.

Capex intensity is rising with capacity expansion, but FY2025 free cash flow of €4.1B shows the order book can fund a lot of the buildout when advances arrive.

Capital allocation has shifted from crisis financing toward growth capex, dividend restoration, and the announced buyback; the risk is funding capacity too aggressively before Gamesa is fixed.

Net cash has recovered sharply from FY2023; the balance sheet no longer looks like the main bear case, but contract liabilities show how much cash depends on project execution.

What Does The Market Think?

The market is paying for scarcity: gas turbine slots, grid capacity, data-center power demand, and a cleaner Gamesa path. That is a legitimate improvement, but the multiple has already moved much faster than reported margins.

The stock is no longer a cheap turnaround: current EV/revenue is about 3.9x versus a post-spin average near 0.7x, roughly 5.0 standard deviations above its own limited public history.

The consensus target sits below the latest close, which says the market is already ahead of sell-side base cases after the April outlook raise.

Siemens Energy trades richer than ABB, Schneider, Hitachi, and Vestas on EV/EBITDA despite lower current operating margin, because the market is valuing backlog scarcity and future margin uplift rather than today's profitability.

Base fair value is roughly today's price, not because the business is weak, but because the stock already discounts much of the FY26 step-up: a bear case around €140, a base case around €187, and a bull case around €234.

The numbers confirm a real recovery in demand, cash generation, and balance-sheet flexibility; they contradict the old survival-crisis narrative, but they also contradict any claim that the stock is still cheap on current earnings. Watch FY26 free cash flow pre tax versus the new around €8.0B outlook, Grid margin, and Siemens Gamesa breakeven progress, because those are the proof points that either justify the premium or expose it.