Global Decarbonization Will Fuel European Onshore Wind Demand

Key Takeaways

• Strong order growth, expanding market opportunities, and high service renewal rates position Nordex for robust recurring revenue and sustainable profit improvement.
  
• Industry shifts and consolidation give Nordex pricing power and supply chain stability, supporting margin expansion and geographical revenue diversification.
  
• Reliance on a saturated core market, competitive pressures, financial constraints, and persistent cost challenges threaten Nordex's future growth, margins, and innovation capacity.

Catalysts

Develops, manufactures, and distributes multi-megawatt onshore wind turbines worldwide.

• Analyst consensus sees strong order book growth as a sign for solid future revenues, but this outlook may underestimate the underlying demand: With an 83% year-on-year increase in turbine order intake and growing lead times, Nordex is poised for a multi-year revenue growth trajectory, with the risk now skewed towards upside surprises in both 2026 and 2027 as deferred orders convert into sales.
  
• While analysts broadly anticipate incremental margin improvement, Nordex is demonstrating a far steeper profit recovery and operational leverage, driven by a 500-basis-point jump in gross margin and a 64% year-on-year increase in EBITDA; this momentum and continued high-margin service mix suggest that EBITDA margins could surpass the mid-term 8% target faster than expected, materially lifting earnings.
  
• Accelerating global electrification, net-zero mandates, and high European power prices are structurally expanding the addressable market for Nordex; with market leadership in Europe, an order backlog extending up to 24 months, and rising barriers to entry, the company is uniquely positioned to capture and outgrow this wave, supporting sustainable high revenue and order growth.
  
• The compounding effect of high service contract renewal rates-approaching 100% in Germany, with fleet availability near 97% and contract tenures averaging 13 years-creates an expanding, visible, recurring revenue stream that is both margin accretive and defensive, underpinning reliable cash flow and high-quality earnings for the long term.
  
• Industry consolidation and grid modernization will further benefit scale players like Nordex, enabling stronger pricing discipline and more stable supply chains; as grid issues resolve in emerging markets and electricity prices rise, Nordex's established footprint allows it to rapidly scale installations, diversify revenues geographically, and structurally enhance net margins.

Nordex Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Nordex compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Nordex's revenue will grow by 11.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.8% today to 4.5% in 3 years time.
• The bullish analysts expect earnings to reach €448.9 million (and earnings per share of €1.89) by about August 2028, up from €60.3 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 bullish analyst cohort, the company would need to trade at a PE ratio of 16.6x on those 2028 earnings, down from 88.5x today. This future PE is lower than the current PE for the GB Electrical industry at 44.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.62%, as per the Simply Wall St company report.

Nordex Future Earnings Per Share Growth

Risks

• Nordex's revenue growth relies heavily on continued expansion in its core European onshore market, but signs of peaking order momentum in major countries like Germany, and uncertain long-term government policy support, introduce risks of weaker order intake and revenue slowdowns in future years.
  
• Intensifying competition from lower-cost manufacturers, especially from China, poses a threat to market share and could force price reductions in regions like Latin America, contributing to margin pressure and limiting earnings growth.
  
• Rising interest rates and volatile macroeconomic conditions may increase the cost of project financing, potentially dampening demand for new wind installations and negatively affecting Nordex's order book and future revenues.
  
• Ongoing structural challenges such as persistent cost inflation, combined with difficulties passing on these higher costs to customers, risk constraining improvements in gross and EBITDA margins and thus depress profitability over the long term.
  
• The company's weak balance sheet and ongoing provision-related outflows for legacy issues continue to strain financial flexibility, increasing its vulnerability to industry downturns and limiting investments in R&D or new technology platforms, which could suppress long-term innovation and earnings potential.

Valuation

• The assumed bullish price target for Nordex is €26.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Nordex's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €26.0, and the most bearish reporting a price target of just €15.4.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €9.9 billion, earnings will come to €448.9 million, and it would be trading on a PE ratio of 16.6x, assuming you use a discount rate of 6.6%.
• Given the current share price of €22.58, the bullish analyst price target of €26.0 is 13.2% 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.