The blueprint for how to run a European industrial giant in a broken economy
Siemens is one of a few European mega-conglomerates that actually managed to modernize without losing its identity. While the rest of Germany’s industrial backbone has been struggling under high energy costs, slow bureaucracy, and general stagnation, Siemens keeps quietly executing a patient and disciplined corporate transformation. Yes, they do it differently from most American megacaps. Less talk about AI, little hype, but a clear vision and relentless execution. No sudden reinventions, with the exception of maybe Siemens Energy. The key to success has always been consistent management, smart portfolio pruning, and operational discipline. Many once-great European industrial giants are struggling massively and nearing oblivion amidst economic pressures and gross mismanagement (see VW or BASF).
Has Siemens’ strategy paid off then? You could say so: since mid-2022, the stock is up roughly 150%. That’s not supposed to happen for a “boring” German industrial stock in a country where the term “business-friendliness” is a foreign concept to the government, yet here we are.
The conglomerate structure, often criticized as unfocused, has actually turned into one of Siemens’ biggest advantages. The management has split off riskier segments to make the core business stand out, while keeping enough to profit from their success. The perfect example is Siemens Energy: while doubted heavily at the beginning, it has now proved to be a strategically important long-term success. Siemens Healthineers is doing fine, nothing spectacular, but stable enough. But the core industrial automation and digitalization business that Siemens fully owns and operates builds the foundation of all the success. That division is thriving (as much as a business of that size can thrive). Many investors forget about the critical importance of Siemens’ core business. In many regards, it’s the backbone of an ongoing global industrial revolution. Siemens is building out AI capabilities, facilitating factory automation, building rail systems, and responsible for critical electrical infrastructure.
Growth projections reflect exactly that: mid-single-digit revenue growth for the coming years, but expanding free cash flow as efficiency increases and the portfolio continues to move toward higher-margin digital and automation solutions. The forward P/E of around 19 is fair. It’s neither cheap nor expensive for a giant with predictable earnings, strong cash generation, and almost impregnable competitive positioning.
Would I want to own it personally? Probably not. It’s slow, steady, and fundamentally unexciting, which doesn’t really fit my style. But as an example of what disciplined management can achieve in a struggling economy, Siemens is unmatched. It’s a German behemoth that actually transitioned into the future instead of getting stuck in nostalgia. Something other German legacy brands could take as an example. The stock likely offers limited upside, yes, but also downside protection. A fortress, even if not the flashiest.
