Alstom Earnings: Announces Better-Than-Expected Deleveraging Plan; We Increase Fair Value Estimate

Narrow-moat Alstom reported a negative full-year free cash flow of EUR 557 million after reporting negative EUR 1.15 billion cash flow in the first half of the year, resulting in a net debt of EUR 3 billion as of March 2024, up from EUR 2.13 billion the year before. However, we have increased our fair value estimate from EUR 17 to EUR 21.7 as the firm provided updates on its deleveraging plan. Our previous fair value of EUR 17 included sales of assets for EUR 500 million and EUR 1.5 billion of equity issuance at EUR 12 per share, with no hybrid bonds. We increase our fair value to EUR 21.7 as we incorporate management’s deleveraging plan, with the equity issuance expected at EUR 16 per share and the sale of the US signaling business viewed as value-neutral.