SIE: Future Returns Will Rely On Automation Margins Amid Portfolio Rebalancing

Analysts have nudged their price target on Siemens slightly higher, lifting fair value by about €2 to roughly €255 per share, as modestly stronger profit margin expectations offset concerns that lower margin electrification and mobility segments could weigh on growth relative to peers.

Analyst Commentary

Analysts are increasingly focused on the differing margin profiles across Siemens' portfolio, weighing the strength of its industrial automation franchise against the drag from electrification and mobility. The latest views reflect a more balanced stance on valuation, with expectations for solid execution but more tempered growth relative to sector leaders.

Bullish Takeaways

Bullish analysts highlight that the higher-margin industrial automation segment continues to underpin group profitability, supporting the slightly higher fair value despite nearer term headwinds.
They see scope for incremental margin improvement if management can streamline lower-margin businesses and capture productivity gains across electrification and mobility.
Some believe the current share price already reflects a discount for slower growth, leaving room for upside if execution on cost control and portfolio optimization outpaces expectations.
Over the long term, bulls argue that Siemens' broad exposure to grid modernization and mobility electrification could translate into resilient demand, even if near term growth lags select peers.

Bearish Takeaways

Bearish analysts emphasize that the structurally lower operating margin in electrification and mobility is likely to cap group margin expansion, limiting re-rating potential from here.
They expect Siemens' sales and profit growth over the coming year to trail key industrial peers, which could pressure the relative valuation premium the stock has enjoyed.
There is concern that a more challenging macro environment could amplify the drag from lower-margin segments, making management's margin and growth targets harder to achieve.
Skeptics also point to execution risk around any portfolio reshaping or efficiency programs, warning that delays or cost overruns could erode the modest uplift embedded in current targets.

What's in the News

Siemens and GE Vernova are reportedly in talks to supply gas turbines for a $7B project to rebuild Syria's war damaged power sector, potentially opening a controversial but sizable infrastructure opportunity in the region (Reuters).
Siemens has begun using JPMorgan's Kinexys Digital Payments blockchain platform for 24/7 cross border FX transactions in major currencies, aiming to improve liquidity management and settlement speed (Bloomberg).
Siemens is studying a potential spinoff of a large part of its majority stake in Siemens Healthineers, with a share distribution to investors under consideration, though no final decision has been made (Bloomberg).
Siemens unveiled its PAVE360 Automotive digital twin software, designed to accelerate development of software defined vehicles by enabling early, full system virtual integration and cutting software development timelines (company announcement).
Siemens announced an annual dividend of EUR 5.35 per share, payable on February 17, 2026, as part of its approach to shareholder returns alongside ongoing portfolio and technology investments (company announcement).

Valuation Changes

Fair Value: risen slightly from about €253 to roughly €255 per share, reflecting modestly higher margin assumptions.
Discount Rate: edged down marginally from around 5.84 percent to about 5.80 percent, implying a slightly lower required return.
Revenue Growth: trimmed slightly from approximately 6.28 percent to about 6.23 percent, signaling a modestly softer top line outlook.
Profit Margin: increased modestly from roughly 11.20 percent to about 11.37 percent, indicating a small uplift in expected profitability.
Future P/E: eased slightly from around 21.78x to about 21.43x, suggesting a marginally lower multiple on forward earnings.

Growth in digital automation, electrification, and hyperscaler data center demand drives recurring revenues and supports margin expansion across Smart Infrastructure and core segments.
Strategic focus on decarbonization, productivity, and portfolio optimization enhances long-term earnings visibility, capital allocation, and market positioning.
Weak demand, tough competition, integration risks, and structural headwinds threaten Siemens' revenue growth, profit margins, and stability in key global markets.

Catalysts

About Siemens

A technology company, focuses in the areas of automation and digitalization in Europe, Commonwealth of Independent States, Africa, the Middle East, the Americas, Asia, and Australia.What are the underlying business or industry changes driving this perspective?

Sustained, accelerating demand for electrification and data center infrastructure-especially from hyperscaler clients-is driving strong top-line growth in the Smart Infrastructure segment, supporting recurring revenues and capacity-based margin expansion over multiple quarters.
Siemens' ongoing shift toward digital and software-defined automation (including recent acquisitions like Altair and Dotmatics, SaaS transitions, and leveraging industrial AI) is expected to materially boost higher-margin, recurring digital revenues and improve long-term margin predictability.
The large, resilient order backlog (€117 billion) and continued strong book-to-bill ratios in core areas such as Mobility and Smart Infrastructure position the company for robust multi-year revenue visibility and support higher consolidated earnings.
Long-term global investments in decarbonization (e.g., electric rail projects in India and Egypt, energy-efficient building upgrades) are expected to drive momentum in Siemens' grid solutions and mobility businesses, expanding addressable markets and supporting above-trend top-line growth.
Restructuring, portfolio optimization, and productivity initiatives-focusing capital on high-growth digital, automation, and electrification opportunities-enhance Siemens' net margins and capital allocation efficiency, setting the stage for outsized earnings growth relative to peers.

Siemens Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Siemens's revenue will grow by 6.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.1% today to 11.2% in 3 years time.
Analysts expect earnings to reach €10.5 billion (and earnings per share of €13.4) by about September 2028, up from €7.9 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €8.9 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.4x on those 2028 earnings, down from 22.6x today. This future PE is lower than the current PE for the GB Industrials industry at 22.3x.
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 5.87%, as per the Simply Wall St company report.

Siemens Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing macroeconomic and geopolitical uncertainties, including high volatility in the tariff environment, persistent trade tensions, and unpredictable regulatory changes are causing hesitation in customer investment decisions, particularly for large-scale projects, which could depress Siemens' order intake and revenue growth over the long term.
The Digital Industries division (DI) faces weak underlying demand in core areas such as automation and software, highlighted by declining revenues, underwhelming recovery in China and Germany, and the absence of a V-shaped rebound; this puts pressure on both top-line growth and profit margins.
Heightened global competition in automation and industrial software, especially from agile local players in China (e.g., Innovent), could lead to market share erosion and intensify pricing pressures, weighing on Siemens' revenue and net profit margins in key growth regions.
Large-scale M&A and SaaS/cloud transitions (e.g., Altair, Dotmatics acquisitions and software "cloudification") bring significant integration risks, upfront costs, and potential for delayed or weaker-than-hoped cost and sales synergies, which can negatively affect earnings and profitability in the transition period.
Structural demographic factors (e.g., muted investment in Germany and mature Western markets, overcapacity in China, sluggish machinery sectors) combined with reliance on cyclical large orders in infrastructure and mobility increase Siemens' exposure to prolonged downturns or slow recoveries, threatening both revenue visibility and earnings stability.

Valuation

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

The analysts have a consensus price target of €243.536 for Siemens 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 €300.0, and the most bearish reporting a price target of just €185.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €93.6 billion, earnings will come to €10.5 billion, and it would be trading on a PE ratio of 21.4x, assuming you use a discount rate of 5.9%.
Given the current share price of €229.45, the analyst price target of €243.54 is 5.8% higher. The relatively low difference between the current share price and the analyst consensus 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.

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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 Debate Siemens Growth and Valuation Amid Modest Fair Value Increase