6J·

Additional Purchase of Bilfinger

Bilfinger $GBF (-0,36 %) released its earnings today, and they were, well, sort of mixed.

Since I still think the long-term outlook is solid, I bought another batch of shares. If the price drops a bit further in the near future, I’ll buy more.

How do you think Bilfinger is positioned?

12.08

Bilfinger

Acheté x4 à 75,25 €

301,00 €

6 Commentaires

Ady@Eastswiss

I'm in on this too; I've had them in my portfolio since December 2021.

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Raketentoni@Raketentoni

I’m not planning to buy right now; I was waiting for the numbers. Why?

1. The “Order Inflow Problem”

A 16% decline in order inflow is the most dangerous warning sign in the manufacturing sector.
This is the “leading indicator” for revenue over the next 6 to 12 months. If no orders come in today, the company won’t be able to issue invoices tomorrow. Anyone buying now is betting that the geopolitical situation (Persian Gulf, etc.) will calm down immediately—that’s speculation, not an investment.

2. Margin Pressure Instead of Economies of Scale

Despite a 7% increase in revenue, Bilfinger’s operating margin is declining (from 5.5% to 5.3%).
This shows that while the company is growing, its business is becoming less profitable. It’s taking more and more effort to generate the same or even less profit. In an environment where costs (labor, energy) are rising, this is a warning sign that the company lacks pricing power.

3. The “back-door” profit warning

Management has revised its full-year operating margin forecast “to the lower end of the range.”
When a company admits that it will barely meet its targets at the lower end of the range, this translates to the following in stock market parlance: “We’re having trouble keeping our promises.”

The market often punishes such companies not only on the first day but also waits to see whether management will have to “readjust” its forecast again when the next quarterly results are released.

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Rügen W.@SSIT

@Raketentoni Thanks for your take on it 👍

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sdp_oxigen@sdp_oxigen

I’ve just finished a deeper analysis of Bilfinger and I actually see the current weakness as potentially interesting, although I’m not rushing into it. What caught my attention is that the fundamentals are moving in the right direction. Revenue is growing, EBITA margins are improving, free cash flow has been very strong and the balance sheet is in a very comfortable position, with very little net debt. The dividend is also growing and, around the current price, the valuation is not particularly demanding at roughly 13–14x forward earnings and around 6x EV/EBITDA.
The part that makes me cautious is the order intake. Q1 was already somewhat weak and Q2 showed a more significant decline. That doesn’t necessarily mean the business is deteriorating, because revenue and EBITA are still growing, but it is something I want to watch closely. For a company like Bilfinger, orders today are ultimately tomorrow’s revenue.
The interesting part of the story for me is the margin potential. The company is currently around a 5.5% EBITA margin and is targeting 8–9% over the longer term. If they can get there while continuing to grow revenues, the earnings potential is quite different from what the current valuation suggests.

So I can understand buying at €75, especially if the intention is to build the position gradually. Personally, I’d probably start with a small position and keep some cash available in case the weakness continues. For me, the key thing to watch now is whether the weaker order intake is temporary or the beginning of a broader slowdown.
Overall, I like the risk/reward at these levels much more than I would have at €120+, but I still want confirmation that the backlog is holding up.

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Smudo@Smudeo

$GBF
$HOT
$STR
$POS

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Rügen W.@SSIT

@Smudeo I totally forgot about that day. Thanks. 😄

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