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Vestas Wind Systems A/S VWS

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Wind Is in Vestas’ Sails Following Solid Fourth-Quarter Results; Raise FVE but Shares Richly Valued

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

No-moat Vestas’ fourth-quarter results were largely unsurprising. Full-year revenue came in as expected, an increase of 22%, although the EBIT margin of 5.1% was slightly lower than our estimate of 6% and fell on the low end of the firm's guidance. Similarly to Siemens Gamesa, Vestas cited execution challenges due to the coronavirus having a negative impact on margins, although Vestas continued to maintain superior margins to its peers. We raise our fair value estimate to DKK 820 from DKK 775 as we roll forward our model and fully integrate Vestas’ offshore business, after it acquired the remainder of the shares from its joint venture with Mitsubishi Heavy Industries in December 2020. Shares are richly valued, which has been driven by substantial capital inflows into ESG funds.

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Company Profile

Business Description

Vestas is the largest manufacturer of wind turbines with the highest installed capacity in the world. The firm operates two business segments: power solutions and services. The power solutions segment designs, manufactures, and installs onshore wind turbines. The services segment performs operating and maintenance service work on wind turbines. The U.S. accounted for approximately 32% of sales in 2019. The company also sells offshore turbines via a joint venture with Mitsubishi Heavy Industries, which Vestas will be buying out.

Hedeager 42
Aarhus, 8200, Denmark
T +45 97300000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 29,378