Alfa Laval Earnings: Record Order Intake Sends Shares 5% Higher

Wide-moat Alfa Laval reported a strong first quarter, delivering organic order growth of 25% and a sequential increase of SEK 2.6 billion from last quarter, despite having guided for demand to be at a similar level. However, management cautioned against investors expecting this rate of growth to be the norm and guided for demand to be sequentially lower during the second quarter. Order intake growth across the marine and energy segments outperformed Wartsila, which also reported its first-quarter results April 25, and mitigated a decline in orders in Alfa Laval’s food and water division due to a tough comparable. Similar to its peer, shares are trading higher on the day. We plan to revise our top-line forecasts to reflect the group’s strong first quarter but reiterate our SEK 280 fair value estimate. Shares currently look overvalued.