Schindler Earnings: Elevator Modernization Orders Shine; Shares Modestly Overvalued

Wide-moat Schindler delivered a robust third quarter, which featured order intake growth of 5.5% in constant-currency terms. Strong demand for elevator modernizations and robust service orders offset still-weak market conditions for new equipment. Schindler’s elevator modernization business continues to grow strongly as Schindler capitalizes on the significant opportunity presented by an aging global installed base of elevators. Accordingly, growth in modernization orders accelerated in the third quarter, up 20% year on year, in constant-currency terms—up from the 5%-10% growth achieved in the prior quarter. Unsurprisingly, new equipment demand remained depressed in China, amid its ongoing real estate slump. Strong demand in the Americas and the Asia-Pacific (ex-China), due mainly to strong market conditions in both India and Brazil, helped to partially offset the ongoing weakness in new installation demand in China.