Siemens Earnings: Record Order Backlog Supports Raised Guidance for the Second Consecutive Quarter

Narrow-moat Siemens delivered a strong second quarter, reporting organic revenue and order intake growth of 15%. The mission-critical role of its vast range of products for customers combined with end markets with favorable secular growth trends, supported industrial profit growth of 41% with record profit margins in the digital industries segment. Similar to peers ABB and Schneider, Siemens raised its full-year guidance (the second consecutive quarter it has done so), anticipating organic revenue growth between 9% and 11%, up from its previously upgraded outlook of 7% to 10% growth. EPS guidance was also revised upward to between EUR 9.60 and EUR 9.90 from its previous guidance between EUR 8.90 and EUR 9.40. While we plan to marginally revise our estimates, we don’t expect a material change to our EUR 160 fair value estimate. Shares are marginally undervalued.