Alstom is struggling on the Paris Stock Exchange. In the space of three months, the share price of the Franco-Canadian railway giant has halved. And it was even divided by three in the space of three years! In question, the shock of quarterly accounts (published at the beginning of October) came out much worse than expected (with a warning on cash generation, which will be much lower than expected). Very disappointing accounts to say the least, which increased the risk of a massive capital increase, in order to keep Alstom in the “investment” category of the rating agencies (i.e. maintain a good repayment capacity of debt and maintain an acceptable financial situation).
However, this specter of a large fundraising for Alstom (very dilutive for current shareholders, due to the plunge in the stock price in recent months) has gained substance this week, the group having just announced the implementation strong measures to improve its financial base: cost reductions (cutting 1,500 jobs), disposals of non-strategic assets (for an amount of up to 1 billion euros), a slashed dividend… and possibly an increase in capital, precisely. A fundraising whose amount remains to be determined but which would a priori be particularly damaging for shareholders, denounces Invest Securities.
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Alstom: has the CAC 40 railway giant hit rock bottom on the stock market after a historic collapse?
Alstom is inexpensive on the stock market but its debt worries
Faced with a particularly heavy net debt (it could represent almost three years of operating margin before depreciation, next year, according to the consensus of financial analysts), Alstom is forced to take “drastic” measures, notes eToro, which argues that the very heavy weight of net financial debt is weighing down the solvency and liquidity of Alstom, affected this year by a “strongly negative cash flow in 2023”.
While the objective of an operating margin of 8-10% in the medium term seems difficult to achieve, to say the least, according to Stifel, the broker continues to advise holding the stock, with the target maintained at 22 euros (fair price estimated value), i.e. a significant potential for theoretical appreciation up to the price objective. Swiss Life Gestion Privée and Oddo BHF also consider Alstom shares to be inexpensive. However, in the immediate future, equity investors are mainly focused on the risks relating to the rescue plan…
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Stock market: CAC 40, Renault, Airbus, Alstom, LVMH, Hermès, Netflix… on the Momentum program this week
Alstom’s plunge on the stock market was correctly anticipated by Momentum, Capital’s investment letter
Momentum, Capital’s premium investment letter on the stock market, had perfectly anticipated this summer the plunge in Alstom’s stock price in recent months. Since our bearish anticipation of September 5 (when Alstom shares were still trading at 24.63 euros), the stock price has fallen by almost half. Our readers were thus able to sell the stock before the collapse. And the most aggressive have even made a lot of money by initiating bets on the fall in Alstom’s stock price. Find our daily scenarios on the CAC 40 and stocks in Momentum. Right now, with the promo code CAPITAL30J, take advantage of a free (and no obligation) one-month trial of our service. To register, simply click on the link below.
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