GEA Earnings: Demand Conditions Improving in Late 2024; Shares Modestly Undervalued

Order intake for wide-moat GEA Group turned a corner in the third quarter of 2024, with new orders flat sequentially and rising 6.6% organically year on year, representing a pleasing outcome given still soft manufacturing sector activity, particularly in Europe. The improvement in demand was broad-based—with all divisions contributing positively to order intake during the third quarter. We expect the combination of recovering demand in late 2024 and GEA’s healthy order backlog—which stood at EUR 3.0 billion at the end of September—to support earnings growth in late 2024 and 2025. GEA screens as modestly undervalued, trading at an approximate 6% discount to our unchanged EUR 48 fair value estimate.