Capital Goods: Weekly Widget. Revisions paint a more positive picture, despite risks. Schneider is due a catch-up, and other observations

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Capital Goods: Weekly Widget. Revisions paint a more positive picture, despite risks. Schneider is due a catch-up, and other observations

IdeaMmidstream mining equipment names (Weir and Metso) have both seen consensus

downgrades, despite many commodity prices being at record highs.

(4) We then look at valuation re-rating and de-ratings since the start of the Iran

conflict – in Exhibit 2 & Exhibit 3 . It is notable that almost all of the Electricals

have re-rated in this time. The exceptions are Legrand and Schnieder, where the

multiples are flat to down during this period. It is also interesting that ABB's 2027

EBITA consensus is +4%, vs Schneider at +1%, yet this has yielded 18% relative share

price outperformance at ABB vs Schneider during this time. We think Schneider is

due a valuation multiple catch-up on this basis versus the broader Electricals sub-

sector. We add more context to Schneider's valuation in Exhibit 6 & Exhibit 7 .

(5) The majority of the Mechanicals names have de-rated by 10-20% on their

valuation multiples since the start of the Iran conflict ( Exhibit 3 ), while most

Electricals have re-rated. Wartsila is the only stock among the Mechanicals that has

not de-rated, despite seeing small earnings downgrades since the start of the

conflict. While we remain Underweight on GEA, it is remarkable to see that Alfa

Laval and GEA have seen the same consensus upgrades (+3%) on 2027 EBITA since

the start of the conflict, but the relative share price spread between the two stocks

is now +19% outperformance for Alfa Laval vs GEA.

Electricals stock conclusions: If we focus purely on this analysis (our

fundamental stock views are laid out in Exhibit 11 ), Schneider looks due for a

catch-up, Signify appears vulnerable after a re-rating, and Prysmian is due a