Atlas Copco Earnings: Weak Demand From Auto Customers Weighs on New-Order Intake; Shares Remain Rich
New-order intake remained under pressure in second-quarter 2024 for wide-moat Atlas Copco. Second-quarter organic order intake growth of negative 1% was a sequential improvement relative to the prior quarter's showing of negative 4%. Still, faltering demand from automotive customers caused new orders to contract 4% quarter on quarter, after adjusting for seasonality, falling short of Atlas Copco's previous near-term guidance and investors' expectations. Atlas Copco shares are down some 5% at the time of writing. A time value of money adjustment leads us to nudge our fair value estimate up by 3% to SEK 150 per share. Atlas Copco shares continue to screen expensively, trading at a 23% premium to our upwardly revised valuation.