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GEA Group AG G1A

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Morningstar’s Analysis

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Increasing Our GEA Fair Value Estimate to EUR 43 on Brighter Long-Term Growth Prospects

Analyst Note

| Denise Molina, CFA |

Following GEA Group’s solid third-quarter results and recent capital markets day, we are increasing our fair value estimate to EUR 43 per share from EUR 35. We maintain our wide moat rating. Two key factors are behind our fair value estimate increase. The first is a 60-basis-point bump to our long-term EBITDA margin, to 15.1%. The second is a higher revenue growth forecast in the medium term, to 4% from 3%. The benefits of new management's decentralization strategy have been showing in more consistent top-line performance as well as margin expansion. Growth in small base-level orders, which are less than EUR 1 million, have been encouraging, particularly around the company’s moatiest segment, separation flow technologies. These smaller orders contribute more than half of the company's new orders, and smaller orders within the SFT division are roughly one fifth of the group. SFT small orders have been outgrowing total small order growth throughout 2021.

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Company Profile

Business Description

GEA is an expert in food processing. It manufactures equipment for separation, fluid handling, dairy processing, and dairy farming, and it designs and constructs process lines or entire plants for customers. Based in Germany, the company is a global market leader, with number-one or number-two positions in its markets. Its separators are used in hundreds of different, tailored applications. Every fourth litre of milk, third instant coffee line, third chicken nugget, and second litre of beer globally is processed using the company's specialised equipment.

Peter-Muller-Strasse 12
Dusseldorf, 40468, Germany
T +49 21191360
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 19,410