A Fresh German Order for Vestas (CPSE:VWS): What the Latest Pipeline Boost Means for Valuation

Vestas Wind Systems (CPSE:VWS) just landed a fresh order that is bound to catch the eye of investors weighing their next move. The company announced a deal with Energiekontor AG in Germany, supplying 13 of its V162-7.2MW turbines and committing to a long-term, 20-year service agreement. While this order itself may not shift the industry's foundations, the combination of scale and a substantial service window signals ongoing appetite for Vestas’ solutions in the key EMEA region. This can be seen as an encouraging indicator for future growth prospects.

This news arrives as Vestas continues to rebuild momentum. After a challenging year, with shares still down 15% over the past 12 months, the stock has shown signs of recovery, climbing 14% in the past 3 months and up 20% year to date. Recent quarterly results also showed annual revenue and net income growth, hinting at gradually improving fundamentals beneath the surface. For investors keeping score, the latest order adds another pillar to Vestas’ project backlog and helps reinforce the story of a company regaining its stride in a complex energy market.

With shares still below highs and new contracts flowing in, is Vestas now trading at a discount, or has the market already factored in a return to growth?

Most Popular Narrative: 10.6% Undervalued

The most widely followed narrative currently contends that Vestas Wind Systems is trading below its estimated fair value, with a calculated discount of 10.6%. This view is based on analyst projections of multi-year growth, margin recovery, and global industry support. Using a discount rate of 7.1%, the narrative points to long-term catalysts and future earnings potential as key drivers behind the valuation.

Global prioritization of energy security and sustainability, with many governments accelerating grid investments and permitting reforms (for example, Germany, UK, and EU-wide alignment), is expanding Vestas' addressable market and could materially increase order volume and top-line growth.

Want to know what ambitious assumptions power this bullish outlook? The valuation narrative leans on expectations of a step-change in earnings and margin growth. Curious about the specific financial milestones analysts believe Vestas can hit? Keep reading, because the full story behind this valuation hinges on forecasts you may find surprising.

Result: Fair Value of DKK140.61 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, order intake volatility and steep offshore ramp-up costs remain significant headwinds. These factors remind investors that Vestas’s recovery path is not without challenges.

Find out about the key risks to this Vestas Wind Systems narrative.

Another View: Discounted Cash Flow Perspective

Looking through the lens of our SWS DCF model, Vestas appears undervalued by a notable margin. This alternative approach examines future cash flows instead of current earnings multiples. However, can two positive signals really tell the whole story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Vestas Wind Systems for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Vestas Wind Systems Narrative

If you have your own perspective or wish to dig into the numbers yourself, you can easily craft your own analysis in just a few minutes. Do it your way

A great starting point for your Vestas Wind Systems research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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