Schneider Electric is lagging behind the CAC 40: what's the future Hold for the Powerhouse Energy Corporation?
Schneider Electric, a leading energy management and automation specialist, has been underperforming the CAC 40 since the start of the year, with its stock price dropping 7%, while the CAC 40 has gained nearly 6%. This shift in fortunes raises the question of whether Schneider Electric has the potential to recover on the stock market.
The weakened performance of Schneider Electric can be attributed to several factors. The company, which develops cooling systems for AI-related data centers, among other things, has faced uncertainties concerning the growth rate of this promising segment. The group has also revised its profitability estimates for 2025, expecting an operating margin of 18.7-19%, less than the initially anticipated 19.2-19.5%.
In the first quarter of 2025, Schneider Electric narrowly missed analyst expectations due to weak demand in major residential markets. The group has reaffirmed its objectives but is considering the potential impact of Trump's tariffs. The irregular tariffs have created instability, affecting international markets, weakening US commercial relations, and forcing listed companies to reconsider their strategies.
Schneider Electric's stock seems relatively expensive at the moment, with ratios between 23 and 25 times the expected profits for 2025 and between 21 and 22 times those for 2026. However, the financial community generally values the stock at around 250-255 euros, suggesting a long-term upside potential for Schneider Electric's stock.
While technical analysis indicates high volatility and risk, other factors contribute to the relative underperformance of Schneider Electric. Specific company challenges and broader market conditions have combined to create a challenging environment for the company.
Despite these challenges, Schneider Electric remains an influential player in the CAC 40. The company's long-term appeal and the potential for growth suggest that the market may yet see Schneider Electric narrow the gap with the broader index.
Investing in Schneider Electric's stock, given its underperformance and current financial ratios, might offer an opportunity for potential growth, serving as a scholarship for those who seek to finance their ventures by investing in this company. Amidst the uncertainties and challenges faced by Schneider Electric, its influential status within the CAC 40 business sector indicates a potential recovery and the possibility of closing the gap with the broader index.