Energy Efficient Renovations And European Consolidations Will Fuel Future Recovery

Key Takeaways

• Government policies and market recovery are boosting demand for Thermador Groupe's HVAC and plumbing products, supporting future revenue and margin growth.
  
• Strategic acquisitions and improved cost management are increasing scale, operational efficiency, and readiness to capitalize on growth when market conditions improve.
  
• Weak sector demand, rising costs, struggling subsidiaries, and dependence on government support and stable supply chains threaten revenue growth, margins, and long-term profit visibility.

Catalysts

Engages in the distribution business in France and internationally.

• The ongoing governmental and private investment in energy-efficient building renovation-backed by programs like MaPrimeRenov, the increase in energy savings certificates, and regulatory focus on sustainability-should drive a structural rebound in demand for Thermador Groupe's HVAC and plumbing solutions, supporting medium-term revenue growth.
  
• Increasing new housing permits and building starts, after several years of decline, are early indicators of a cyclical recovery that will fuel greater replacement and new installation demand across Thermador Groupe's product portfolio, positively impacting future revenues and operating leverage.
  
• The group's proactive M&A strategy, including the integration of C2AI and the acquisition of Quilinox, accelerates consolidation efforts across fragmented European markets, providing access to new geographies and product lines, thereby enhancing scale and future revenue growth while supporting margin improvement through greater operating efficiency.
  
• Advances in transport cost management (negotiation of fixed price contracts with shipping partners) and supply chain discipline have recently enabled margin recovery, suggesting that the company can further expand gross and net margins as volumes recover and price conditions stabilize.
  
• Thermador Groupe's commitment to maintaining and slightly increasing headcount, despite a challenging market, positions the company to rapidly capitalize on market recovery; once organic growth resumes (which management expects), this operating readiness is likely to drive faster top-line growth and stronger earnings rebound due to operational leverage.

Thermador Groupe Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Thermador Groupe's revenue will grow by 6.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.5% today to 10.5% in 3 years time.
• Analysts expect earnings to reach €62.3 million (and earnings per share of €6.02) by about August 2028, up from €41.7 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.2x on those 2028 earnings, down from 17.4x today. This future PE is lower than the current PE for the GB Trade Distributors industry at 76.4x.
• Analysts expect the number of shares outstanding to decline by 0.33% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.33%, as per the Simply Wall St company report.

Thermador Groupe Future Earnings Per Share Growth

Risks

• The company reported a 5.6% drop in turnover and declining net profit margin in the most recent period, with ongoing pressure in both retail and professional channels-suggesting persistent end-market weakness could suppress revenues and earnings if sector recovery remains slow.
  
• Management noted rising fixed costs and an increase in headcount despite falling sales, which, alongside limited further opportunities for cost cutting, raises the risk of margin compression if organic growth does not rebound, directly impacting operating profit and net margins.
  
• Several subsidiaries (e.g., Axelair, DPI, Thermacome) are currently loss-making and some have significant amortization of goodwill driving reported deficits; continued underperformance or ineffective integration of new acquisitions could weigh on group profitability and earnings quality.
  
• The group's outlook heavily relies on a rebound in public renovation schemes and a recovery in new housing starts; any sustained delay or restrictive changes in government subsidies (like MaPrimeRenov) or building activity could stifle revenue growth and hamper long-term earnings visibility.
  
• There are indications of operational risks from supply chain disruptions, lengthening lead times for imports from Asia, and previous stock-outs at key subsidiaries (e.g., Sferaco); further issues in logistics or inventory management could negatively affect service quality, sales, and working capital needs, ultimately reducing free cash flow and lowering earnings.

Valuation

• The analysts have a consensus price target of €90.5 for Thermador Groupe based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €596.6 million, earnings will come to €62.3 million, and it would be trading on a PE ratio of 16.2x, assuming you use a discount rate of 7.3%.
• Given the current share price of €79.2, the analyst price target of €90.5 is 12.5% 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.