Alstom: Buying the Dip at €16
Position Update: Adding 800 shares @ €16 to virtual portfolio | Long-term conviction hold
Alstom shares plunged ~30% today after the company withdrew its three-year cumulative free cash flow guidance and issued a cautious FY25/26 outlook. Management now guides for organic revenue growth of 3-5% (vs. consensus 5.3%) and an adjusted EBIT margin of ~7% (vs. 7.3% expected), with FY25/26 FCF guidance of €200-400M well below the €625M consensus. Near-term headwinds include an expected H1 FCF outflow of up to €1B.
Why we're buying:
This is a classic case of short-term noise obscuring long-term value. Despite the guidance revision, Alstom delivered:
- Record orders driving backlog above €100B
- Short positions were built up beforhand because of general caution
- Book-to-bill ratio >1x with strong services momentum
The market is pricing in permanent impairment, but Alstom's structural position remains intact: global rail decarbonization tailwinds, a diversified geographic footprint, and a services mix that improves margin visibility over time. We buy the stock with the first price target of €21, implying ~31% upside from current levels.
At €16, the stock trades at ~0.6x EV/Sales (2026E) with a forward P/E of ~14.5x. These multiples appear attractive only if management executes its turnaround plan; should execution delays persist or margin recovery stall, the valuation could prove less supportive than current estimates suggest.
Our view:
We treat this pullback as a long-term entry point for a speculative position. Execution risk is real, but the turnaround trajectory, supported by operational improvements under new leadership—remains on track. We scale in now with a 3-5 year horizon. May add more should stock lose some more ground over the next weeks/months.
Disclosure: This is a simulated position for nobelselect.com research purposes. Not financial advice.