Tenaris (BIT:TEN) Margin Drop to 16.9% Challenges Bullish Rebound Narratives

Tenaris (BIT:TEN) posted net profit margins of 16.9% for the year, down from 20.2% a year ago. Over the past five years, the company managed to turn profitable with average annual earnings growth of 28.3%. However, earnings declined over the most recent twelve months. Investors now face a mixed outlook, as earnings are projected to fall by 2.4% per year for the next three years. Revenue growth is expected to slow to 1.6% per year, lagging the broader Italian market’s 5.2% pace.

See our full analysis for Tenaris.

The next step is to compare Tenaris’s numbers to the current narratives shaping investor expectations, highlighting where the data supports or contradicts the story so far.

See what the community is saying about Tenaris

PE Ratio Discount Narrows Versus Peers

• Tenaris trades at a price-to-earnings ratio of 10.4x, about half the peer average of 20.1x and only slightly above the sector average.
• Analysts' consensus view contends that this discount, combined with high earnings quality, creates a value opportunity even as earnings growth expectations are now subdued.
  • Despite this valuation gap, the share price of €17.3 remains below the DCF fair value of €28.34. This challenges the notion that the market is fully pricing in the risk of slowing growth.
  • The current ratio also suggests that Tenaris is not as stretched as other industry players and enhances its defensive appeal if market conditions worsen.

To see what bulls and bears are debating in detail, check out the full consensus narrative for Tenaris.

📊 Read the full Tenaris Consensus Narrative.

Margin Outlook Weighs on Future Upside

• Profit margins are expected to decline from 17.0% today to 14.7% over the next three years, according to analyst forecasts.
• Analysts' consensus view suggests that the margin squeeze could limit upside, even if manufacturing efficiency and regional expansion support resilience.
  • This anticipated margin erosion directly addresses the consensus point that future profitability will become harder to maintain, despite strategic cost moves and project wins.
  • With global competition and tariffs threatening to push production costs higher, the company’s ability to hold the line on margins will be a key test for the current investment case.

Inventory and Trade Policy Remain Overhangs

• Analysts expect the number of shares outstanding to decline by 4.51% per year, which may boost per-share returns. However, persistent high U.S. inventory and trade-related cost risks still loom large.
• Analysts' consensus view highlights that while share repurchases could help cushion EPS, the pricing pressures tied to U.S. tariffs and uneven demand recovery may prolong the path to earnings stabilization.
  • The recent doubling of U.S. steel tariffs to 50%, paired with heavy onshore inventory, directly challenges management’s cost discipline and revenue outlook.
  • Until these headwinds subside, valuation support from buybacks and regional backlog is likely to face ongoing pressure from macroeconomic and policy uncertainty.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Tenaris on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Tenaris research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

With shrinking profit margins, slowing earnings growth, and increasing cost pressures, Tenaris now faces a tougher path to consistent performance.

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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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