Alstom SA (ALO.PA) is a global leader in sustainable mobility, providing rolling stock, signalling, and services. After a challenging period marked by supply chain disruptions and cash flow issues, the company is now in the midst of a turnaround, with a clear focus on margin improvement and debt reduction.
Our thesis is that Alstom’s backlog of €92 billion provides exceptional revenue visibility, while the company’s cost-saving and commercial discipline will drive margin expansion. The global shift towards rail as a low-emission transport mode is a powerful secular tailwind, and Alstom is well-positioned to benefit from infrastructure investments in Europe, Asia, and the Americas.
Key catalysts over the next 12 months include the delivery of the Aventra contract in the UK, which has been a drag on cash flow, and the continued ramp-up of the Coradia regional trains. Management has guided for an operating margin of 6-7% by 2025, and we expect the market to reward progress towards this target.
Risks include execution risk on legacy projects and potential cost overruns, as well as macroeconomic headwinds that could affect order intake. However, with a strong balance sheet and improving fundamentals, we believe Alstom offers an attractive risk-adjusted upside.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making investment decisions.