Siemens Beats 2Q17 Estimates, Backlog Rises to €22.6bn

Siemens Beats 2Q17 Estimates, Backlog Rises to €22.6bn

 
Industrial conglomerate Siemens AG (OTCMKTS:SIEGY) reported fiscal 2017 second-quarter results that surpassed analysts’ estimates. Still, the stock did not move upwards and continues to trade at about $140. The main reason for the lacklustre movement in the stock price is the disappointment from the reconfirmation of FY17 outlook. The market was expecting a raised guidance from the company. Still, we anticipate the stock to appreciate due to the facts discussed below. Siemens closed yesterday’s trading session at $146.38, up 2.37% or $3.38 from the prior close.

The Munich-based company reported a 6% increase in fiscal 2017 second-quarter revenues to €20.22 billion, from €18.996 billion in the similar quarter last year. The Wall Street analysts had anticipated revenues of €19.8 billion.

Aided by an 18% y-o-y increase in profit in the industrial business, Siemens reported 2Q17 net income of €1.483 billion, or €1.75 per share, compared with €1.48 billion, or €1.76 per share, in 2Q16. The Q2 2017 net profit was above Thomson Reuters Consensus estimates of €1.43 billion.

Industrial business segment’s Q2 2017 profit of €2.5 billion was higher than the Street’s Consensus estimates of €2.29 billion. During the March 2017 quarter, profit margins in the Industrial business increased to 12.1%, from 10.9% in the year-ago quarter.

Digital factory (technology based division for integrating hardware and software) segment reported profit of €482 million and exceeded forecasts of €460million. Profit margins increased to 17.8%, from 15.1% in the same period last year.

During the recent quarter, the order backlog increased 1% to €22.6 billion and jumped past the Wall Street estimates by about 5%. Siemens also closed the €4.5 billion acquisition of Mentor in March. Additionally, in April, the company entered into a $1.3 billion deal to acquire a 59% stake in Spanish wind turbine maker Gamesa. The deal positioned the company as the world’s largest wind farm builder.

Looking ahead, Siemens reconfirmed its fiscal 2017 basic earnings outlook range of €7.20 to €7.70 per share. Furthermore, the company also reiterated Industrial Business’ profit margin range of 11% to 12%. Thus, a strong order backlog and impressive performance of the Industrial business segment is expected to turn the stock bullish.

The historic price chart indicates strong support for the stock at 140. The Chakin money flow indicator is above zero, while the stochastic RSI indicator is in the oversold region. Thus, we can expect a rally in the stock soon.

Siemens - Technical Analysis - 6th June 2017

To take advantage of the rally, we shall look at the prospects of purchasing a call option from a binary broker. To minimise risk, we would select a contract which remains valid for a period of one week. Additionally, we shall enter only when Siemens trades at about $144 in the equity market.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.


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