Capital Goods - Chart of the Week #124: Who has the most dry powder and what to do with it

Research evidence excerpt

Capital Goods - Chart of the Week #124: Who has the most dry powder and what to do with it

Equity Research

European Capital Goods

7 June 2026

Capital Goods - Chart of the Week #124

Who has the most dry powder and

what to do with it

Higher quality end of CapGoods sector has accumulated UK Capital Goods

material dry powder on the balance sheet. We see ABB, SIE, NEUTRAL

KONE, ALFA more likely to deploy it via M&A, while SCHP, ENR, NEUTRALEuropean Capital Goods

EPIA potentially return more to shareholders. Lower margin/ European Capital Goods

Rajesh Patkihigher leverage ALO, NIBE, LIGHT lack strategic optionality.

+44 (0)20 3555 5193

rajesh.patki@barclays.com

The higher quality end of the CapGoods sector appears generally underlevered. We map Barclays, UK

2026e EBIT margin and Leverage (Net Debt/EBITDA) for our CapGoods coverage. Companies in

Vlad Sergievskii

the upper left corner (high margin and low leverage) have the biggest capital deployment +44 (0)20 7116 1117

optionality. Some are likely to see increasing M&A spending: ABB, SIE, KONE and ALFA. While vlad.sergievskii@barclays.com

others are likely to delivery higher shareholder distribution: SCHP, ENR and EPIA. Companies Barclays, UK

with subdued margins that have relatively elevated leverage (ALO, NIBE and LIGHT) could lack

George Featherstone, CFA

strategic flexibility and warrant a lower valuation multiple, in our view. +44 (0)20 3555 8585

george.featherstone@barclays.comFIGURE 1. 2026e leverage (x-axis) vs. EBIT margin (y-axis) for the covered companies in EU Cap Goods

sector Barclays, UK

35% Timothy Lee, CFA

+44 (0)20 7773 6879

AUTO

30% timothy.lee@barclays.com

VACN Barclays, UK

25% RAA Madalena Azevedo

ROR

+44 (0)20 7773 3616 BEAN ATCOA

SAND HLMA WEIR

LR madalena.amadogomesdeazevedo@barclays.c 20% EPIA SPX