Sale of my position, which I held as a $TKA (+5,29 %) a shareholder in 2025.
Summary: Dividends and selling the position too late—not an outperformer.
TKMS raises its forecast—the valuation becomes more challenging.
The latest financial results now also provide further fundamental arguments for the rise in the stock price.
As announced on Wednesday (Aug. 12), TKMS increased revenue by 19% year-over-year to 1.89 billion euros in the first nine months of fiscal year 2025/26 (as of Sept. 30), revenue by 19% compared with the same period last year to 1.89 billion euros, while adjusted EBIT rose by 13% to 110 million euros. The most important segment, Submarines, is performing particularly well: Here, adjusted EBIT quadrupled to 46 million euros, as higher-margin new construction projects ramp up and the burdens from older projects decline. Meanwhile, Atlas Electronics increased revenue by 28% and adjusted EBIT by 31%.
Even more significant is the forecast, which has been raised once again. Instead of the previous range of 2% to 5%, the MDAX-listed company now expects revenue growth of 10% to 12% for the full year. The adjusted EBIT margin is expected to rise to as much as 6.5%. The medium-term target of approximately 10% annual growth and a margin of more than 7% was confirmed.
The order backlog reached 20.1 billion euros at the end of June. This figure does not yet include the German government’s most recent major order: The contract signed after the end of the quarter for four MEKO A-200 frigates, including an option for four more, will not be recognized until the final quarter. In Canada, TKMS has since been selected as the preferred supplier for up to twelve submarines and is working to finalize contract negotiations. If signed, this would be the largest single order in the company’s history. Final contract negotiations are also underway with India for six submarines, including an option for three more.
One fly in the ointment remains free cash flow, which has fallen from 631 million to minus 204 million euros. However, this is not a sign of operational weakness, but primarily the result of the scheduled completion of projects; as the high figure from the previous year was inflated by customer prepayments for the 212CD program.
Following the sharp rise in the stock price, a great deal of optimism is now priced into the stock (105.40 euros; DE000TKMS001). While the forward P/E ratio was still at 33 when we initiated coverage in June, it now stands at around 39 for 2026/27 (as of September 30). Concurrently, consensus EPS estimates for 2027 were raised by 11%; for the 2025–2028 period, average annual growth of around 24% is now expected.
The combination of a growing order backlog, rising margins, and several potential billion-euro contracts continues to justify the high valuation. However, after a price gain of over 30% in less than two months, a new entry into the stock is not necessarily advisable.
