Upcoming Price Surge by 64%: Is This Stock Truly Superior to Rheinmetall and Peers?
Steyr Motors: The Unstoppable Austrian Stock on a Record-Breaking Run
This stock is on fire! Last week, the shares of engine manufacturer Steyr Motors shot up nearly 70 percent, and on Monday, the stock rose by more than 100 percent, with another 64 percent jump to 358 euros on Tuesday at Tradegate. Over the past two weeks, the stock price has multiplied by about 16!
The catapult of this highflier started on March 11 when the company announced an agreement with Rheinmetall for the development and delivery of military engines. This deal significantly fueled the stock's surge. Now, the fruits of the labor for the 2024 financial year have come out - with an increase in both revenue and profits.
Defense Boom: Steyr Motors' Growing Empire
The gains in the business sectors are mainly due to the insatiable demand for military goods. Steyr Motors produces high-octane engines that are used, for instance, as the main engine in military special vehicles and boats.
The extraordinary rise in the share price might also be attributed to the low proportion of shares readily available. The majority shareholder of Steyr Motors is the investment group Mutares. The group's shares also rose by approximately 10 percent to a record level of 49.10 euros on Tuesday at Tradegate.
The Elephant in the Room: Is The Price Justified?
In just four days, Steyr Motors' shares have surged by 300 percent, outperforming all German defense stocks tied to Rheinmetall. But is this astounding growth warranted? With a market capitalization of nearly two billion euros and anticipated earnings of around 65 million euros in 2025, the current price-to-sales ratio of 28 is arguably exorbitant compared to the values of 4 and 3 at Rheinmetall and Renk. Investors seem skeptical.
Some experts suggest that the rapid stock growth and high valuation are due to the crowd's positive sentiment towards the European defense sector and optimistic forecasts of continued defense spending growth. On the other hand, the substantial order backlog and growth targets might have seduced investors, leading to a slightly inflated P/S ratio compared to peers like Rheinmetall and Renk. However, the actual P/S ratio data or comprehensive financial analysis is required to solidify these assumptions.
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With material from dpa-AFX
Additional Info:
Steyr Motors is an Austrian engine manufacturer that serves both the defense and civil sectors. The company's defense sector accounts for approximately 59% of its revenue, listing notable customers such as Rheinmetall, BAE Systems, the U.S. Navy Seals, and the Canadian army. In the first quarter of 2025, Steyr Motors reported a revenue increase of 26.4%, reaching EUR 11.5 million compared to EUR 9.1 million in the same period last year. Currently, Steyr Motors is in a ramp-up phase to address its substantial order backlog, which stands at approximately EUR 200 million and extends into 2027. The company has affirmed its 2025 targets, expecting at least 40% revenue growth and an EBIT margin above 20%. The investment group Mutares serves as the majority shareholder of Steyr Motors, and its shares experienced an approximate 10% rise to a record level of 49.10 euros on Tuesday at Tradegate.
- Steyr Motors' growth in the business sectors, primarily in the defense industry, is largely driven by the increased demand for military goods, given their high-octane engines are used in military special vehicles and boats.
- The investment group Mutares, the majority shareholder of Steyr Motors, also saw a 10% rise in its shares, reflecting the positive sentiment towards Steyr Motors and the European defense sector.
