Automation And OEM Hesitance Will Cripple Long-Term Outlook

Key Takeaways

• Sluggish adaptation to rapid automation and AI shifts, plus overdependence on automotive clients, threatens demand stability, recurring orders, and margin resilience.
  
• Rising competition, regulatory uncertainty, and e-mobility investment delays intensify cost pressures and challenge long-term profitability and revenue visibility.
  
• Diversification into new markets, disciplined cost management, and strong technology leadership position Aumann for resilient profitability and sustained growth as electrification trends accelerate.

Catalysts

Manufactures and sells specialized machines and production lines for electromobility, automation, and robot applications in Germany, rest of Europe, the United States, Canada, Mexico, China, and internationally.

• The rapid adoption of fully integrated automation and artificial intelligence in manufacturing may occur faster than Aumann can adapt, threatening the relevance of its current technology portfolio and leading to long-term erosion of demand, which would significantly lower future revenues and pressure gross margins.
  
• A slowdown in electric vehicle adoption caused by worsening supply chain bottlenecks, raw material shortages, and unpredictable policy shifts may delay e-mobility investments, resulting in persistently weak order intake and reduced revenue visibility over the next several years.
  
• Ongoing overconcentration in the automotive sector, combined with reluctance from major OEM clients to invest or exposure to in-house production trends, could drive heightened revenue volatility and diminish Aumann's ability to secure recurring, high-quality orders, leading to unstable earnings profiles.
  
• Rising competition from lower-cost Asian machinery manufacturers is likely to force aggressive price concessions, damaging Aumann's ability to defend its margins, especially as project-based revenues face greater cyclical volatility and cost inflation.
  
• The growing regulatory burden and uncertainty around tariffs and trade tensions-especially in key end-markets like Europe and China-may increase production complexity and costs for Aumann, further weighing on long-term profitability and restricting both net margin expansion and free cash flow generation.

Aumann Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Aumann compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Aumann's revenue will decrease by 3.0% annually over the next 3 years.
• The bearish analysts assume that profit margins will shrink from 6.9% today to 6.2% in 3 years time.
• The bearish analysts expect earnings to reach €17.7 million (and earnings per share of €1.23) by about August 2028, down from €21.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 9.3x on those 2028 earnings, up from 7.5x today. This future PE is lower than the current PE for the GB Machinery industry at 20.3x.
• Analysts expect the number of shares outstanding to decline by 1.84% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.87%, as per the Simply Wall St company report.

Aumann Future Earnings Per Share Growth

Risks

• Persistent long-term growth in battery electric vehicle sales globally, with BEVs expected to comprise up to two-thirds of automotive sales by 2035, directly supports Aumann's core e-mobility segment and could drive sustained improvement in future revenue as investment climate recovers.
  
• Ongoing expansion into adjacent markets such as aerospace, cleantech, and life sciences, all experiencing robust investment and structural growth, may reduce Aumann's dependency on automotive and enable diversification that protects and grows earnings over time.
  
• Maintaining double-digit EBITDA margins, even amid declining revenues, demonstrates disciplined cost management and high-quality order execution, suggesting net margins may remain resilient and support long-term profitability.
  
• Enhanced technology leadership in high-precision coil winding, stator manufacturing, and automation positions Aumann to secure premium, higher-margin projects as global industries continue shifting toward electrification and automation, potentially widening its future earnings base.
  
• Strong balance sheet, with over €100 million in net cash, allows Aumann to flexibly pursue organic growth and strategic M&A, accelerating its entry into new growth markets, which can drive both revenue expansion and future margin improvement.

Valuation

• The assumed bearish price target for Aumann is €10.6, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Aumann's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €16.0, and the most bearish reporting a price target of just €10.6.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be €284.1 million, earnings will come to €17.7 million, and it would be trading on a PE ratio of 9.3x, assuming you use a discount rate of 5.9%.
  
• Given the current share price of €11.24, the bearish analyst price target of €10.6 is 6.0% lower.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.