Last Update 18 Dec 25

Fair value Decreased 0.45%

DTG: Improving Earnings Quality Will Support Future Confidence Despite Softer Margin Outlook

Analysts have slightly reduced their price target for Daimler Truck Holding to €41.87 from €42.06, citing modestly lower long term growth and margin expectations, while still seeing room for valuation support from improving earnings quality.

Analyst Commentary

Analysts describe the latest price target adjustment as a fine tuning rather than a fundamental reassessment. It reflects a balance between healthy near term execution and more measured assumptions for the out years.

While Daimler Truck Holding continues to benefit from solid demand, incremental efficiency gains, and a more resilient earnings mix, there is also growing recognition that cyclical normalization and investment needs could temper the pace of value creation.

As a result, recent research highlights both supportive elements for the equity story and factors that could limit upside if management underdelivers on strategic and financial targets.

Bullish Takeaways

Bullish analysts emphasize that improving earnings quality and cash generation underpin the current valuation, providing a buffer even under more moderate growth assumptions.
They point to operational efficiency measures and disciplined cost control as key drivers that can sustain attractive margins despite a softer long term volume outlook.
Ongoing portfolio optimization and a clearer focus on higher value segments are seen as catalysts for multiple support as the business mix becomes structurally more profitable.
Some analysts argue that the recent price target trim mainly reflects prudence in long term modeling, not a deterioration in near term fundamentals or execution momentum.

Bearish Takeaways

Bearish analysts warn that lower structural growth expectations could cap re rating potential, keeping the shares closer to cyclical peer multiples rather than premium levels.
There is concern that margin expansion may prove harder to deliver if demand normalizes faster than anticipated or if cost inflation resurges, pressuring profitability.
Execution risk around strategic initiatives and technology investments is flagged as a potential drag on returns, especially if payback periods extend beyond current forecasts.
Some caution that the current valuation already embeds a meaningful degree of confidence in management’s delivery, leaving limited room for missteps on capital allocation or cycle timing.

What's in the News

Edenred partners with Daimler Truck to provide the Spirii eMobility software backbone for the new TruckCharge semi-public charging network, aimed at building Europe's leading exclusive charging network for heavy transport and supporting EU 2030 climate targets (Key Developments).
The TruckCharge Network will allow companies to open their depot charging stations to approved third parties for paid use, helping maximise utilisation of existing and future charging infrastructure and improve cost control for fleet operators (Key Developments).
Daimler Truck and UTA Edenred extend their cooperation, giving Mercedes Benz electric truck customers access to about 420 truck compatible public charging stations across 23 countries via the Mercedes ServiceCard charging card, including fast chargers from Milence (Key Developments).
For 2025, Daimler Truck expects Trucks North America to reach the lower end of its 135,000 to 155,000 unit sales range and 10% to 12% return on sales corridor, with fourth quarter profitability weaker than the third quarter due to mix, tariffs, and higher R&D and SG&A (Key Developments).
Mercedes Benz Trucks' full year 2025 profitability is expected at the midpoint of the 5% to 7% guidance range, with fourth quarter unit sales targeted to be about 20% higher than the third quarter, assuming supplier issues are resolved in time (Key Developments).

Valuation Changes

Fair Value: reduced slightly from €42.06 to €41.87, reflecting marginally softer long term assumptions.
Discount Rate: lowered modestly from 8.53% to about 8.37%, implying a slightly lower perceived risk profile.
Revenue Growth: trimmed slightly from roughly 4.28% to about 4.14% annually, indicating a more cautious top line outlook.
Net Profit Margin: eased from around 6.25% to about 5.96%, pointing to slightly lower expected profitability.
Future P/E: increased moderately from about 10.7x to roughly 11.2x, signaling a small uplift in the multiple applied to forward earnings.

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