US Policy Shifts And Project Cancellations Will Hamper Green Hydrogen

Key Takeaways

• Delays, cancellations, and shifting project scales in green hydrogen are expected to constrain revenue growth and increase volatility in sales performance.
  
• Rising protectionism, project concentration, and fierce global competition threaten export growth, margins, and long-term pricing power.
  
• Strong project execution, innovation focus, and flexible cost management position thyssenkrupp nucera for sustained growth and resilience in the evolving green hydrogen industry.

Catalysts

Engages in the development, engineering, procurement, commissioning, and licensing of high-performance electrolysis technologies in Germany, Italy, the Middle East, Africa, South America, Asia, and internationally.

• The decline in aggregate project pipeline size, driven by delays and cancellations of large-scale green hydrogen projects due to regulatory uncertainty and infrastructure gaps, is likely to depress order intake and constrain forward revenue growth.
  
• Slower-than-expected adoption of green hydrogen technology, particularly the shift from gigawatt-scale projects to smaller installations and delayed customer final investment decisions, implies that revenue and sales will underperform optimistic projections over the next cycle.
  
• Rising protectionism and local content requirements in key regions such as the US and Middle East, combined with the company's recent need to streamline its international pipeline, increase the risk of weaker export growth and could directly pressure both top-line revenue and profitability.
  
• An overreliance on a handful of mega-projects (like NEOM and Stegra) leaves earnings and margins vulnerable to further project delays, contract disputes, or cancellations, amplifying the volatility of both short-term and long-term financial performance.
  
• Intensifying global competition in electrolyzer technology, cost pressures, and the potential commoditization of the segment threaten to erode net margins, particularly as the long-term industry trend moves toward lower prices and diminished pricing power for established players like thyssenkrupp nucera.

thyssenkrupp nucera KGaA Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on thyssenkrupp nucera KGaA compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming thyssenkrupp nucera KGaA's revenue will decrease by 10.6% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 1.8% today to 3.8% in 3 years time.
• The bearish analysts expect earnings to reach €24.7 million (and earnings per share of €0.2) by about August 2028, up from €16.2 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 52.5x on those 2028 earnings, down from 70.8x today. This future PE is greater than the current PE for the DE Construction industry at 29.6x.
• Analysts expect the number of shares outstanding to decline by 0.25% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.04%, as per the Simply Wall St company report.

thyssenkrupp nucera KGaA Future Earnings Per Share Growth

Risks

• The company's strong order backlog of around €0.7 billion provides solid future sales visibility, which supports resilience in revenues even amid slow new order intake periods.
  
• A leading market position in both green hydrogen and chlor-alkali segments, coupled with the successful execution of landmark projects like NEOM and Stegra, enhances thyssenkrupp nucera's industry reputation and is likely to sustain top-line revenue growth.
  
• Strategic R&D investments, such as the acquisition of Green Hydrogen Systems' technology and the SOEC collaboration, accelerate innovation and time-to-market for next-generation electrolysis solutions, supporting long-term competitiveness and potential margin expansion.
  
• The reopening of momentum in the U.S. hydrogen market with renewed clarity on funding, along with an active pipeline in Europe and the Middle East, increases the likelihood of new large-scale orders, maintaining healthy revenue and earnings streams.
  
• The asset-light business model and demonstrated flexibility in cost management, including SG&A optimization and outsourcing, provide the company with tools to protect net margins and sustain cash flow even during periods of lower project volumes.

Valuation

• The assumed bearish price target for thyssenkrupp nucera KGaA is €8.7, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of thyssenkrupp nucera KGaA'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 €17.0, and the most bearish reporting a price target of just €8.7.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be €654.4 million, earnings will come to €24.7 million, and it would be trading on a PE ratio of 52.5x, assuming you use a discount rate of 6.0%.
  
• Given the current share price of €9.08, the bearish analyst price target of €8.7 is 4.4% lower. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
  
• 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.