Last Update 04 Dec 25

Fair value Decreased 1.10%

DTG: Margin Durability Will Drive Future Confidence Despite Softer Profit Outlook

Analysts have modestly trimmed their fair value estimate for Daimler Truck Holding from approximately EUR 42.53 to EUR 42.06. This reflects a slightly higher discount rate and a softer margin outlook that partially offsets improved top line growth expectations and aligns with the recent reduction in Street price targets.

Analyst Commentary

Recent Street updates point to a generally constructive stance on Daimler Truck Holding, even as fair value estimates and price targets are nudged lower to reflect a more balanced risk reward profile. The modest trimming of targets is largely driven by valuation discipline and a slightly more cautious margin narrative rather than a fundamental shift in long term growth expectations.

Bullish analysts continue to emphasize the company’s solid execution on revenue growth and its leverage to cyclical demand recovery, while more cautious voices focus on the sustainability of margins through a potentially softer macro backdrop and input cost volatility.

In aggregate, the research suggests that upside remains, but that investors need to closely track the company’s ability to deliver on profitability and capital allocation to support current multiples.

Bullish Takeaways

Bullish analysts highlight that top line growth remains robust relative to peers, which supports the case for multiple resilience even after modest target reductions.
Improving order trends and a solid backlog are seen as reinforcing medium term earnings visibility, helping to underpin current and slightly lower fair value estimates.
There is confidence that management can continue to execute on operational efficiencies, offsetting part of the softer margin outlook and preserving attractive return on capital.
Despite a small cut in price targets, the prevailing Buy ratings indicate that analysts still view the current share price as not fully reflecting the company’s growth and margin potential.

Bearish Takeaways

Bearish analysts point to rising discount rates and macro uncertainty as reasons to apply more conservative valuation assumptions, limiting near term upside.
Concerns persist around the durability of elevated margins if demand normalizes or pricing power wanes, which could pressure earnings relative to current forecasts.
The reset in Street price targets suggests expectations are being recalibrated to account for execution risks in cost control and supply chain management.
Some investors may remain cautious until there is clearer evidence that free cash flow generation can consistently track earnings, supporting both reinvestment and shareholder returns at current valuation levels.

What's in the News

Daimler Truck Holding issued earnings guidance for the fourth quarter and full year 2025, signaling confidence in navigating additional tariff costs across key regions (company guidance).
For Trucks North America in 2025, the company expects unit sales at the lower end of the 135,000 to 155,000 range and return on sales at the lower end of the 10% to 12% corridor, reflecting a more conservative profitability outlook (company guidance).
Fourth quarter 2025 Trucks North America unit sales are projected to be roughly in line with the third quarter, but profitability is expected to be weaker due to unfavorable mix, fading pricing tailwinds, higher tariff costs, and seasonally higher R&D and SG&A expenses (company guidance).
Mercedes Benz Trucks full year 2025 profitability is anticipated to land at the midpoint of the 5% to 7% guidance range, supported by expected fourth quarter unit sales about 20% higher than the third quarter, contingent on resolving supplier challenges (company guidance).
For 2025 overall, Daimler Truck Holding guides revenue to be around the midpoint of its range, with profitability trending toward the lower end and sales expected between the midpoint and lower end of the target corridor (company guidance).

Valuation Changes

The fair value estimate edged down slightly from €42.53 to €42.06, implying a modest reduction in upside potential.
The discount rate increased slightly from 8.44% to approximately 8.53%, reflecting a marginally higher perceived risk profile or required return.
The revenue growth assumption was raised meaningfully from about 2.38% to approximately 4.28%, signaling improved expectations for top line expansion.
The net profit margin was reduced moderately from around 6.62% to roughly 6.25%, indicating a somewhat more cautious view on profitability.
The future P/E multiple was trimmed marginally from about 10.79x to approximately 10.73x, pointing to a slightly more conservative valuation framework.

Leadership in zero-emission trucks and digital fleet solutions is boosting recurring revenues and enhancing profitability as emission regulations tighten.
Operational efficiency programs and global market diversification are strengthening margins and supporting more resilient, long-term earnings.
Weak truck demand, ZEV delays, cost pressures, and policy risks threaten Daimler Truck's revenue, margins, cash generation, and ability to invest or return capital.

Catalysts

About Daimler Truck Holding

Manufactures and sells light, medium- and heavy-duty trucks and buses in Europe, North America, Asia, Latin America, and internationally.What are the underlying business or industry changes driving this perspective?

Daimler Truck's leadership in battery-electric and hydrogen truck platforms (e.g., eActros 600, GenH2 Truck) positions it to capitalize on the accelerating shift toward zero-emission vehicles, especially as decarbonization and emissions regulations increase; this is likely to drive strong long-term revenue growth and support higher gross margins as cost parity with diesel improves and infrastructure develops.
Ongoing investments in digital fleet solutions-including the Coretura software joint venture and connected aftersales services-are expanding Daimler Truck's higher-margin, recurring revenue streams, which should gradually enhance overall net margins and earnings predictability.
The new global parts center and expansion of aftersales initiatives are expected to strengthen Daimler Truck's market share and competitive moat, supporting margin accretion and more resilient free cash flow due to increased parts/service revenues.
Strategic execution of operational efficiency programs, including modular platform architectures, cost reduction measures (e.g., headcount rationalization in Europe and North America), and capacity adjustments, should help sustain improvements in EBIT margin and protect earnings even during cyclical downturns.
Daimler Truck's access to global growth markets (Asia, Brazil, Defense sector, etc.) provides diversification away from mature and cyclical core markets, offering long-term revenue expansion opportunities as e-commerce, logistics, and urbanization trends support higher freight and commercial vehicle demand worldwide.

Daimler Truck Holding Earnings and Revenue Growth

Daimler Truck Holding Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Daimler Truck Holding's revenue will grow by 3.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.5% today to 6.4% in 3 years time.
Analysts expect earnings to reach €3.8 billion (and earnings per share of €4.87) by about September 2028, up from €2.4 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as €4.4 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.2x on those 2028 earnings, down from 12.1x today. This future PE is lower than the current PE for the DE Machinery industry at 17.4x.
Analysts expect the number of shares outstanding to decline by 3.31% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.86%, as per the Simply Wall St company report.

Daimler Truck Holding Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Daimler Truck is experiencing significant declines in North American truck sales and orders (Q2 unit sales down 20%, orders down 50%+), and guidance for the rest of the year relies on an assumption that recent order upticks in July will continue in an environment CEO and CFO repeatedly described as volatile and uncertain; if demand recovery proves weaker than expected, revenue and earnings could face further downside pressure.
The transformation to zero-emission vehicles (ZEVs) is experiencing delays, particularly in the U.S., shown by a €218 million impairment on capitalized development costs, and management notes that ZEV order intake actually declined year-on-year; missed execution or slower industry adoption could reduce Daimler Truck's competitiveness and future revenue growth.
Structural cost challenges are evident, including a high-cost base in Europe triggering large restructuring and headcount reduction programs (~5,000 jobs in Europe and 2,000 in North America/Mexico), with further comment that significant headcount reduction is necessary to meet profitability goals; if efficiency gains or cost reductions fall short or labor relations worsen, net margins and long-term competitiveness could be at risk.
The outlook remains highly sensitive to macroeconomic, tariff, and regulatory events-in particular, U.S. trade policy (e.g., potential Section 232 tariffs on Mexican-built trucks, ongoing NAFTA/USMCA tensions) and EPA/NOx rules, all of which create earnings unpredictability and could drive up material and manufacturing costs or constrain market access, with negative implications for both revenue and margins.
Free cash flow and net liquidity have declined (Q2 net industrial liquidity €5.9bn vs €7.9bn in Q1), and full-year FCF guidance was cut by €800 million, mainly due to lower expected earnings in North America; persistent working capital build, ongoing heavy capex (including into ZEVs and digital platforms), and rising material and labor costs may limit the company's ability to sustain shareholder returns and invest for growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €44.115 for Daimler Truck Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €56.0, and the most bearish reporting a price target of just €32.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €58.3 billion, earnings will come to €3.8 billion, and it would be trading on a PE ratio of 10.2x, assuming you use a discount rate of 7.9%.
Given the current share price of €37.59, the analyst price target of €44.11 is 14.8% higher.
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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Cautious on Daimler Truck as Price Targets and Valuation Expectations Ease