Schneider Electric Earnings: Backlog Grows Further on Broad-Based Strength; Guidance Raised Again

Wide-moat Schneider Electric delivered impressive first-half results, growing organic revenue and EBITA by 15% and 29%, respectively. Price increases of 9%, mostly consisting of actions taken in the prior year to offset inflation, were the main driver behind the strong print. Despite good execution of its backlog, the group’s order book continues to grow to record levels and offers over 6 months' visibility, enabling management to raise the midpoint of its full-year revenue and EBITA guidance by 0.5% and 2%, respectively. Solid volume growth in the current uncertain economic environment displays the high-value nature of Schneider’s products and solutions. While we plan to revise our estimates for Schneider’s better-than-expected first-half EBITA margin, we don’t expect to meaningfully change our EUR 160 fair value estimate, which is where shares are currently trading at.