Earnings, cash flow, and orders all exceeded expectations; Capital Markets Day may trigger a new round of target upgrades

Overview

Siemens Energy released its fiscal 2026 third-quarter results on August 5, 2026. Revenue, profit before special items, pre-tax free cash flow, and orders all performed strongly, with earnings and cash flow significantly exceeding expectations. Management raised full-year profit margin before special items guidance to the upper end of the 10% to 12% range while maintaining comparable revenue growth guidance of 14% to 16%. Demand in Gas Services remains robust, the transmission grid business is supported by long-cycle growth, and Siemens Gamesa achieved its first quarterly profit in nearly four years. Goldman Sachs believes the results will drive the market to raise full-year earnings expectations and views the November 11 Capital Markets Day as the next key catalyst.

Core views

First, third-quarter profit before special items was about 18% above consensus, and strong execution supports further upward revisions to full-year earnings expectations. Second, global gas turbine demand is expected to remain at 110 to 120 GW per year through fiscal 2030, with the U.S. accounting for about half; if data center demand materializes, it could add another 20 GW of potential upside. Third, the company’s total gas turbine commitments have increased from 87 GW in the previous quarter to 95 GW, and management expects the figure to approach 100 GW by year-end, strengthening medium-term revenue visibility. Fourth, Siemens Gamesa’s quarterly turnaround indicates progress in the recovery of the wind power business, with higher margins and lower capital expenditure expected to improve cash flow in the future. Fifth, Goldman Sachs expects the company’s fiscal 2030 EBITA to be 6% above consensus and believes the valuation discount versus GE Vernova is likely to narrow as execution improves.

Analysis framework

The report compares quarterly actual results with the prior-year period and company-compiled consensus expectations, and evaluates the direction of earnings revisions based on management’s conference-call comments on orders, capacity, pricing, demand, and segment guidance. Valuation uses a sum-of-the-parts approach, applying peer EV/EBITA multiples to assess the Gas & Power business and discounted cash flow to value Siemens Gamesa, while also using forward EV/EBITDA to compare relative valuation with GE Vernova.

Methodology notes

• Valuation methodsSum-of-the-parts valuation method

  Assess the major business segments separately and then aggregate enterprise value.

  The Gas & Power business is valued using a 22.0x peer 2027 calendar-year expected EV/EBITA multiple, while Siemens Gamesa is valued separately using discounted cash flow.

• Valuation methodsDiscounted cash flow method

  Discount expected future cash flows to present value using the cost of capital.

  The report uses a 7.2% after-tax weighted average cost of capital for the discounted cash flow valuation of Siemens Gamesa.

• Relative valuationEV/EBITDA peer comparison

  Compare enterprise value relative to expected earnings before interest, taxes, depreciation, and amortization.

  Siemens Energy trades at about 6x expected fiscal 2030 EV/EBITDA; on a 2028 expected basis, it has an approximately 47% valuation discount relative to GE Vernova.

• Performance analysisActual versus consensus variance analysis

  Compare actual results with market consensus expectations to identify the direction of earnings revisions.

  Third-quarter profit before special items was about 18% above company-compiled consensus, and orders were about 6% higher, pointing to room for upward revisions to full-year consensus expectations.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Siemens Energy (ENR1n.DE)

  Core recommended stock

  Strengths

  Large order backlog, strong gas turbine demand, long growth cycle in the transmission grid business, Siemens Gamesa beginning to turn profitable, and notable free cash flow and capital return potential.

  Weaknesses

  Siemens Gamesa’s third-quarter free cash flow remained negative, some onshore wind turbine models have quality issues, and the earnings recovery still requires sustained execution.

  Comparison

  On a 2028 expected EV/EBITDA basis, it has an approximately 47% valuation discount relative to GE Vernova; Goldman Sachs believes execution improvement will support a narrowing of the discount.

  Risks

  Competition and pricing pressure, cost savings falling short of expectations, economic weakness, adverse changes in exchange rates and raw materials, as well as project execution and wind turbine quality issues.

• GE Vernova

  Main relative valuation reference

  Strengths

  The market assigns it a higher valuation multiple, reflecting stronger recognition of earnings and growth.

  Weaknesses

  Its valuation is significantly higher than Siemens Energy’s, implying a lower margin of safety.

  Comparison

  GE Vernova trades at about 22x expected 2028 EV/EBITDA, roughly twice Siemens Energy’s valuation multiple for the same period.

  Risks

  If Siemens Energy’s execution continues to improve, the valuation gap between the two may narrow.

Key data

• Fiscal 2026 third-quarter revenue€114.47 hundred millionComparable growth of 18.5% year on year; company-compiled consensus was €112.21 hundred million.
• Profit before special items€16.23 hundred millionThe prior-year period was €4.97 hundred million, and consensus was €13.80 hundred million; corresponding margin was 14.2%.
• Pre-tax free cash flow€23.19 hundred millionThe prior-year period was €4.19 hundred million; about 90% of full-year guidance has been achieved in the first nine months.
• Third-quarter orders€179.26 hundred millionComparable growth of 8.5% year on year, 6% above consensus.
• Order backlog€1,620 hundred millionGas Services, Grid Technologies, Transformation of Industry, and Siemens Gamesa were €720 hundred million, €510 hundred million, €80 hundred million, and €310 hundred million, respectively.
• Full-year profit margin before special items guidance12%Management raised guidance to the upper end of the 10% to 12% range.
• Full-year pre-tax free cash flow expectationAbout €80 hundred millionFull-year net income is expected to be about €40 hundred million.
• Total gas turbine commitments95 GWThe previous quarter was 87 GW; management expects the figure to approach 100 GW by year-end.
• Siemens Gamesa quarterly profit€75 millionThis was the first quarterly profit since the fourth quarter of fiscal 2022.
• 12-month target price€212Current price €150.86, implying 40.5% potential upside.

Impact & implications

The strong quarterly performance is likely to drive the market to raise fiscal 2026 EBITA expectations and increase confidence in revenue growth, margin expansion, and cash-flow acceleration through fiscal 2030. Gas Services orders and service margins, long-cycle capital expenditure demand for transmission grids, and Siemens Gamesa’s earnings recovery form the three main growth pillars. If management sets higher medium-term targets at the November Capital Markets Day and delivers on its capital return plan, the company’s valuation discount versus GE Vernova may narrow further; however, the current investment thesis still depends on execution of large projects, resolution of wind turbine quality issues, and smooth conversion of orders into profit and cash flow.

Risks

• Quality issues in specific onshore wind turbine models may not be effectively controlled.
• Intensifying competition and pricing pressure may weaken order margins.
• Cost-saving plans may not be realized as expected.
• Macroeconomic weakness may suppress customer capital expenditure and project progress.
• Exchange-rate fluctuations and rising raw material costs may create earnings headwinds.
• Poor execution of large projects may prevent orders from being smoothly converted into profit and cash flow.
• Incremental gas turbine demand related to data centers may fail to materialize.

What to watch

• Fiscal 2030 targets, segment margins, and capital allocation plans to be announced at the November 11 Capital Markets Day.
• Whether full-year fiscal 2026 profit margin before special items can reach 12%, and whether pre-tax free cash flow can approach €80 hundred million.
• Whether total gas turbine commitments can approach 100 GW by year-end.
• Whether data center demand translates into a potential 20 GW of incremental orders.
• Pricing, service margins, and capacity arrangements at Gas Services.
• Whether Siemens Gamesa can achieve full-year breakeven and turn into a free cash flow contributor.
• Future shareholder return policy and the feasibility of returning more than €250 hundred million of capital by the end of 2030.
• Whether the valuation discount relative to GE Vernova narrows as earnings are delivered.