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SKF AB Class B SKF B

Morningstar Rating
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Stock XSTO Rating as of
SEK 225.20 +5.60 (2.55%)
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As of Delayed Price Closed
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Company Report

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SKF Earnings: Pleasing Profit Margin Progression in Early 2024 Despite Weakened Top-Line Result

Grant Slade

We make no change to our SEK 220 fair value estimate for narrow-moat SKF following delivery of first-quarter 2024 results, which tracked broadly in line with our full-year forecasts and company guidance. Organic sales declined by 7%, reflecting a broad-based weakening of demand for SKF’s industrial and automotive bearings amid challenging market conditions. Still, SKF delivered a pleasing 30 basis points of EBIT margin progression to 13.4% despite the easing of the top line in the first quarter. Lower raw material costs and easing labor cost inflation for the automotive segment largely accounted for the improvement in EBIT margin performance in early 2024.

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Price vs Fair Value

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SKF B is trading at a 1% premium.
Price
SEK 222.30
Fair Value
SEK 594.00
Uncertainty
High
1-Star Price
SEK 217.00
5-Star Price
SEK 465.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

A portfolio repositioning to address attractive market niches, including electric vehicles, automation, and renewable energy, offer some growth opportunities amid SKF’s otherwise largely mature, procyclical end-market exposures.

Bears

SKF’s long-term top-line growth target strikes us as ambitious relative to the secular growth opportunities in front of the business.

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Trading Information

Previous Close Price
SEK 219.60
Day Range
SEK 223.30–231.20
52-Week Range
SEK 163.35–239.00
Bid/Ask
SEK 224.90 / SEK 225.00
Market Cap
SEK 102.55 Bil
Volume/Avg
1.9 Mil / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
13.20
Price/Sales
1.01
Dividend Yield (Trailing)
3.33%
Dividend Yield (Forward)
3.33%
Total Yield
3.34%

Company Profile

SKF’s history goes back to the first major patents in ball bearings, when in 1907 it was the first to patent the self-aligning ball bearing. SKF, along with the Schaeffler Group, are the top two global ball bearing suppliers followed by Timken, NSK, NTN, and JTEKT. Combined, these six companies supply about 60% of the world’s ball bearings. However, most of them have sector niches as ball bearings for industrial purposes are engineered for specific applications. SKF is based out of Sweden and has a global manufacturing footprint of 106 sites and about 17,000 global distributor locations. The firm operates under two segments: industrials, which has a fairly fragmented customer base; and automotive, which is the opposite, with a concentrated customer base including the likes of Tesla.
Sector
Industrials
Industry
Tools & Accessories
Stock Style Box
Mid Core
Total Number of Employees
40,051
Website
https://www.skf.com

Competitors

Valuation

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Metric
SKF B
6506
EMR
Price/Earnings (Normalized)
 13.2034.9122.47
Price/Book Value
 1.784.163.04
Price/Sales
 1.012.893.96
Price/Cash Flow
 8.5725.2620.91
Price/Earnings
SKF B
6506
EMR

Financial Strength

Metric
SKF B
6506
EMR
Quick Ratio
 1.151.060.62
Current Ratio
 2.232.241.12
Interest Coverage
 16.6719.848.67
Quick Ratio
SKF B
6506
EMR

Profitability

Metric
SKF B
6506
EMR
Return on Assets (Normalized)
 6.02%7.52%7.03%
Return on Equity (Normalized)
 12.84%14.15%17.23%
Return on Invested Capital (Normalized)
 9.50%11.11%8.75%
Return on Assets
SKF B
6506
EMR
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