Connected Kitchens Will Accelerate Global Urban Transformation

Key Takeaways

• Innovative products and automation leadership position the company for accelerated market share and earnings growth amid global trends in sustainability and labor shortages.
  
• Expanded factory capacity and local sales efforts are paving the way for sustained growth, especially in Asia, with recurring revenue bolstering financial resilience.
  
• Heavy reliance on exports, product concentration, and exposure to global risks combined with rising competition threaten RATIONAL's margins, growth prospects, and premium market position.

Catalysts

Engages in the development, production, and sale of professional cooking systems for industrial kitchens in Germany, rest of Europe, North America, Latin America, Asia, Australia, New Zealand, the Middle East, and Africa.

• Analysts broadly agree the launch of new products like the iHexagon will drive incremental revenue growth, but early customer successes with major stadiums signal the possibility of much faster and broader adoption, indicating these innovations may accelerate both top-line growth and market share gains well beyond consensus expectations.
  
• While the analyst consensus sees factory expansions in France and China as supporting Asian growth, RATIONAL's Road to China project coupled with low local market penetration positions the firm for an inflection point in Asian sales from 2026 onwards, with upside potential for sustained high double-digit revenue growth and margin improvement as localized, cost-effective production enhances competitiveness.
  
• RATIONAL's proven resource-efficient kitchen solutions, validated by the recent independent studies showing up to 25% energy and 50% water savings, uniquely position the company to benefit from a worldwide shift toward sustainable, efficient commercial kitchens, supporting both accelerated replacement cycles and premium pricing, thereby expanding both revenue and gross margin.
  
• The accelerating shortage of skilled kitchen labor and rising global labor costs are creating powerful, long-term tailwinds for the rapid adoption of automated, intelligent cooking solutions-an area where RATIONAL leads-suggesting an upside to both addressable market size and long-term earnings growth as automation becomes a necessity rather than an option for foodservice operators.
  
• RATIONAL's ongoing expansion of its sales organization, with a measurable quick return on investment in new hires and increasing local market penetration in both developed and emerging regions, sets up a structurally higher sales growth trajectory and recurring revenue opportunities through aftersales and digital service contracts, driving higher, more resilient earnings and cash flow.

RATIONAL Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on RATIONAL compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming RATIONAL's revenue will grow by 8.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 20.8% today to 20.7% in 3 years time.
• The bullish analysts expect earnings to reach €323.5 million (and earnings per share of €28.41) by about August 2028, up from €253.7 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 38.6x on those 2028 earnings, up from 29.3x today. This future PE is greater than the current PE for the GB Machinery industry at 20.1x.
• 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 5.8%, as per the Simply Wall St company report.

RATIONAL Future Earnings Per Share Growth

Risks

• RATIONAL's heavy reliance on exports from Europe makes its business highly vulnerable to rising global protectionism, with U.S. tariffs already increasing import costs and potentially pressuring both net margins and future sales revenue if the company cannot effectively pass on these costs to customers.
  
• The company's portfolio remains highly concentrated in the combi-steamer segment, so any market saturation, technological disruption from new foodservice models, or regulatory changes targeting this product type could significantly slow revenue growth and erode profitability.
  
• Growing competition from lower-cost manufacturers, especially in Asia, combined with ongoing industry consolidation, threatens RATIONAL's premium pricing strategy, and could lead to declining net margins and squeezed earnings as market share is pressured.
  
• Failure to adequately scale after-sales service and support-especially as RATIONAL expands internationally-could result in weaker recurring revenue streams and reduce customer loyalty, thereby impacting long-term revenue and earnings growth.
  
• The company is exposed to persistent risks from input cost volatility and supply chain disruptions, such as those in metals and electronic components, which may cause unpredictable costs, delays, and ultimately pressure gross margins and annual profits.

Valuation

• The assumed bullish price target for RATIONAL is €958.35, which represents two standard deviations above the consensus price target of €749.21. This valuation is based on what can be assumed as the expectations of RATIONAL'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 €1020.0, and the most bearish reporting a price target of just €565.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €1.6 billion, earnings will come to €323.5 million, and it would be trading on a PE ratio of 38.6x, assuming you use a discount rate of 5.8%.
  
• Given the current share price of €653.0, the bullish analyst price target of €958.35 is 31.9% 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.