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Sandvik AB SDVKY

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Demand for Mining Equipment Drives Q1 Order Growth for Sandvik; Raising FVE but Shares Remain Rich

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

Narrow-moat Sandvik’s exposure to cyclical end markets with low visibility leads to volatile swings in demand. In first-quarter 2021 this was favorable, buoyed by high commodity prices leading to a record order intake level for the mining segments. We are raising our fair value estimate to SEK 193 from SEK 158 per share, which is driven by a reduction in our weighted average cost of capital due to divestments and restructuring that have lowered the systematic risk of Sandvik, rather than a material change in our forecasts. Shares remain richly valued and are currently trading at an all-time high.

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Company Profile

Business Description

Sandvik is a manufacturer of specialized tools and mining equipment used predominantly by global mining, engineering, and automotive customers. The company’s core operations are in metal cutting and mining equipment. The company has a well-documented history, having been founded in 1862 and listed on the Nordic Exchange in Stockholm in 1901.Europe is the largest contributor to group sales at 35%, followed by North America 22%, Asia 20%, Africa/Middle East 9%, Australia 9%, and South America 5%.

Contact
Kungsbron 1, Section G, Floor 6
Stockholm, 111 22, Sweden
T +46 84561100
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 38,421

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