Morningstar

Schneider Electric: Data Center Demand Underpins Continued Acceleration in Revenue Growth

We expect the energy management business to remain the group’s biggest growth driver.

Schneider Electrics anläggning
Skrivanek Petr via AP

Key Morningstar Metrics for Schneider Electric

  • Fair Value Estimate
    : EUR 250.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Wide
  • Morningstar Uncertainty Rating
    : Medium

Schneider Electric’s first-quarter organic revenue grew by 11.2%, continuing its trend of accelerating since the first quarter of 2025. Data centers remain the biggest growth driver, and Schneider is among the largest beneficiaries of AI infrastructure investment in the capital goods sector.

Why it matters: Schneider’s first-quarter sales update reiterates our view that it’s the preferred pick in the European electrical equipment sector. Its outsized exposure to multiyear secular growth themes across both the data center and electrical utility end markets continues to demonstrate its superior top-line growth relative to peers.

  • The update confirms our view that the upper end of Schneider’s full-year organic revenue guidance, which was maintained at 8%-10%, is achievable. Pricing is expected to ramp up during the year to fully offset raw material and tariff headwinds, supporting our expectation of a 60-basis-point adjusted EBITDA margin expansion for the full year.
  • The capital expenditure guidance from hyperscalers suggests that data centers will remain Schneider Electric’s largest growth driver in the medium term. We believe that its broad data center product offering and technological capabilities will withstand shifts in data center infrastructure architecture.

The bottom line: We keep our fair value estimate of EUR 250 per share for wide-moat Schneider Electric. Shares are fairly valued.

  • We keep our forecasts unchanged and are confident that Schneider will deliver the upper end of its 8%-10% organic revenue guidance. We expect the energy management business to remain the group’s biggest growth driver, supporting our 10.7% revenue expectation for the full year.
  • We believe the market is fully pricing in Schneider’s attractive growth prospects. We assume 11% annualized EPS growth during our five-year forecast period, which is best-in-class across the European electrical equipment suppliers.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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