I noticed while browsing the forum that one of my personal favorites, which is also a favorite of the Wallenberg family, is missing from here.
In my opinion, Wärtsilä has followed a very interesting strategic path, the latest step being cost-cutting, while not forgetting the emphasis on its renewable energy strategy. I am following with interest how the company intends to implement these strategies and when the fruits will start falling into investors’ pockets.
What do you other stock sharks think about this company, founded in 1834? Do others see the energy and marine strategy as a viable solution?
@erkki.vesola
Credit Suisse updated its recommendation to underweight at 12.50. You increased it to 15.50.
Everyone evaluates it in their own way, of course, but there’s about an 18% difference in price, if I looked correctly.
You have quite opposing views?
Yes, there is a difference. We believe that megatrends are on Wärtsilä’s side. We believe that acting as an integrator between different forms of electricity production (e.g., solar power and gas-powered backup power) and related to this, smart storage and control systems (offered by Wärtsilä-owned Greensmith) are a strong competitive advantage in a market undergoing disruption. On the Marine side, Wärtsilä’s operations as a maritime “ecosystem supplier” (in addition to engines and propulsion systems, smart navigation solutions, optimized energy use of the vessel, digital communication systems with the port, etc.) have already freed Wärtsilä from being merely an engine supplier. Engines currently account for approximately 30% of Marine Solutions’ business. In addition, ship scrubbers will bring a significant amount of high-margin business for the next few years. Overall, we consider Wärtsilä’s risk profile to be low: the order book and balance sheet are strong, and operational predictability is good. A valuation multiple comparison relative to peers also still indicates upside potential.
Revenue, operating profit, and EPS fell slightly short of Inderes’ and consensus estimates. Similarly, the operating profit margin seemed to be slightly lower than predicted, and order intake was a minor disappointment. The CEO mentioned weaker development in the energy markets. Savings will only be visible later in the year.
I’m monitoring from the sidelines for now; I still believe this year will be quite modest in terms of expected returns. For a long-term portfolio, this probably wouldn’t be a bad choice, especially if one had capital needing a safe haven, once the savings and scrubbers show up on the bottom line and power plant orders start rolling in…
Usually, with these, we see a “mongoose effect” in terms of recommendations, so there’s probably no rush to buy in that sense. How does @DayTraderXL’s TA look? The RSI levels at least are tempting for buys. (You can comment on the TA thread if you want to keep this one fundamentals-based.)
I can add a chart there at some point, but since the price is back at 3-year levels and a firm of JP Morgan’s caliber downgrades it to reduce, with a target price of 12.50, the decline could continue significantly. Such a change is not made on flimsy grounds, so the order book must surely be empty. I didn’t even consider a bottom-fishing play at this point, not even for intraday. If it makes one more leg down, then I’ll be interested in it as an intraday target.
What’s interesting about Wärtsilä here? For the past ten years, I’ve been waiting for a turnaround, for renewables to save the day so I can hit the buy button, but no results. Well, luckily there are other companies on the stock exchange, so I don’t have to buy. I would imagine the company would be doing better if their technology was actually that good.
Returns have practically been based solely on dividends unless one has managed to cleverly sell and buy at the right time. Weak.
If you bought ten years ago (10/2009 price level 2.585) and sold at the end of last year (10/2018 price level 20.765), surely that didn’t go too badly?
I’m interested in all targets if I can buy at a turning point. The bottom could be much lower, but I’m monitoring this regardless.
It wasn’t on my shopping list. In a way, I was a little upset afterwards that I didn’t press the buy button. But at that point, there were certainly plenty of options.
@DayTraderXL Yeah, just put it on a TA chart and tell us what it’s saying as a ‘TA Whisperer’
And Gadus, if you had bought Wärtsilä in 2009 at the highest closing price, which was €3.72, it would still have yielded a return with the stock price increase to the current price of €12+, or even if you had bought at the 2007 peaks. As a smart investor, you would, of course, also diversify your purchases over time, right?
Wärtsilä has earlier provided the turnkey installation for the world’s largest bioLNG facility located in Skogn, Norway and will, by the end of the year, deliver two more bio-LNG plants to customers in Scandinavia. Interest from both the European and North American markets is high, and Wärtsilä anticipates continued strong growth in this sector.
Give it a try.Wärtsilä’s share price declined on Wednesday after banking giant JPMorgan lowered its target price and recommendation for the stock. The target price dropped by 3.90 euros to 12.50 euros, and the recommendation shifted from “add” to “sell”. HSBC, Carnegie, and DNB have also lowered their Wärtsilä recommendations since the last interim report. The report revealed a disappointing order intake for the beginning of the year. Additionally, expectations for order growth are low compared to other engineering companies.
However, the company is not particularly expensive relative to its peers. Even half of the analysts still recommend buying the stock.
The service business, which accounts for about half of sales, helps to smooth out cyclical fluctuations.
Wärtsilä (Wärre) is an interesting stock. It has never really been hyped properly. Below, however, is one investment story.
In 2002, I bought 90 shares of Wärtsilä for my son’s portfolio. The investment was then a little over 2000€. After splits in 2004, 2011, and 2018, the number of shares has risen to 810, and the ownership has quintupled. In addition, Wärtsilä has paid dividends, which have been invested in other stocks. So, compounding is not directly visible here.
Some wise has once said that the best stocks are a bit boring. This holds true for Wärtsilä, as it has always felt a bit expensive, a bit boring, and I haven’t previously found a good opportunity to buy it for my own portfolio. Now, Wärtsilä would offer an opportunity for an even more interesting story. It just needs to be told to the broader (investor) public, so that the message doesn’t get lost under traditional-looking images of ships and power plants.
Agreed, Wärtsilä has gradually grown into a significant international company, but the energy sector is still awaiting its breakthrough and is a rather big question mark.
I’ve personally only kept it on my watchlist, especially after JPM lowered its rating. I’ve been waiting to see if it would break below 12. The triple top at 12.275 was not positive from a technical analysis perspective.
The RSI levels at least are tempting for buys. (You can comment on the TA thread if you want to keep this one fundamentals-based.)
has once said that the best stocks are a bit boring. This holds true for Wärtsilä, as it has always felt a bit expensive, a bit boring, and I haven’t previously found a good opportunity to buy it for my own portfolio. Now, Wärtsilä would offer an opportunity for an even more interesting story. It just needs to be told to the broader (investor) public, so that the message doesn’t get lost under traditional-looking images of ships and power plants.