Vaisala - Expecting a solid quarter
Vaisala reports its Q1 result on Friday, April 29th. We expect growth to continue, but low component availability to restrict profitability improvement. With our estimates intact, we retain our HOLD rating and TP of 41.0.
Vaisala faces strong demand in Q1
Vaisala reported strong order book in its Q4’21 financial bulletin. W&E’s order book amounted to EUR 127m while IM’s order book was on a record level at EUR 33m. Q1 has typically been the quietest quarter for Vaisala, and we expect topline to grow by 18.1% y/y to EUR 108.6m driven by a strong demand for IM’s applications and W&E’s soft comparison period. In our estimates, W&E reports a revenue of EUR 59.5m (+14% y/y) while after successful Q1 IM achieves a topline of EUR 49.1m (+24% y/y), representing almost half of group net sales.
EBIT margin to remain flat
Despite ongoing component shortage, the company has been able to deliver all its orders so far. We expect the company to continue component purchases from spot markets and thereby material costs to stay at elevated level. However, the company has transferred some increased material costs to consumer prices in early 2022 and, hence, we expect gross and EBIT margin to remain approx. flat compared to Q1’21. Our W&E Q1 EBIT estimate lands to EUR -1.5m while we expect IM to report an EBIT of EUR 11.4m. In total, our Q1 EBIT estimate amounts to EUR 9.6m (8.8% margin).
HOLD with a target price of EUR 41.0
In our view, Vaisala’s valuation is quite elevated. Vaisala trades with 22E EV/EBITDA and EV/EBIT multiples of 17.7x and 24.1x while its peer group is valued with corresponding multiples of 16.2x and 18.3x. In short-term, we find no reason for an upside in Vaisala’s valuation, but given solid earnings growth, as a long-term investment, we find it reasonable to stay on Vaisala’s board ahead of Q1 result. With our estimates intact, we retain our HOLD rating and TP of EUR 41.0.
Vaisala reported strong order book in its Q4’21 financial bulletin. W&E’s order book amounted to EUR 127m while IM’s order book was on a record level at EUR 33m. Q1 has typically been the quietest quarter for Vaisala, and we expect topline to grow by 18.1% y/y to EUR 108.6m driven by a strong demand for IM’s applications and W&E’s soft comparison period. In our estimates, W&E reports a revenue of EUR 59.5m (+14% y/y) while after successful Q1 IM achieves a topline of EUR 49.1m (+24% y/y), representing almost half of group net sales.
EBIT margin to remain flat
Despite ongoing component shortage, the company has been able to deliver all its orders so far. We expect the company to continue component purchases from spot markets and thereby material costs to stay at elevated level. However, the company has transferred some increased material costs to consumer prices in early 2022 and, hence, we expect gross and EBIT margin to remain approx. flat compared to Q1’21. Our W&E Q1 EBIT estimate lands to EUR -1.5m while we expect IM to report an EBIT of EUR 11.4m. In total, our Q1 EBIT estimate amounts to EUR 9.6m (8.8% margin).
HOLD with a target price of EUR 41.0
In our view, Vaisala’s valuation is quite elevated. Vaisala trades with 22E EV/EBITDA and EV/EBIT multiples of 17.7x and 24.1x while its peer group is valued with corresponding multiples of 16.2x and 18.3x. In short-term, we find no reason for an upside in Vaisala’s valuation, but given solid earnings growth, as a long-term investment, we find it reasonable to stay on Vaisala’s board ahead of Q1 result. With our estimates intact, we retain our HOLD rating and TP of EUR 41.0.