Intrinsic Value Alstom S.A. (ALO.PA)

• Previous Close: €27.02
• Intrinsic Value: €12.35
• Upside potential: -54%

Stock Valuation Context

Business Model And Market Position

Alstom SA is a global leader in the rail transport industry, providing integrated solutions across rolling stock, signaling, and services. The company operates in Europe, the Americas, Asia-Pacific, the Middle East, and Africa, offering a diversified portfolio that includes high-speed trains, metros, trams, and locomotives, alongside digital and electrification solutions. Its revenue model is driven by both new rolling stock sales and long-term service contracts, ensuring recurring income streams. Alstom holds a strong competitive position due to its technological expertise in sustainable mobility, including catenary-free and energy-efficient systems. The company benefits from global infrastructure investments and urbanization trends, positioning it as a key player in the transition toward greener transportation. Strategic acquisitions, such as Bombardier Transportation, have further expanded its market share and technological capabilities, reinforcing its leadership in rail innovation.

Revenue Profitability And Efficiency

Alstom reported revenue of €18.49 billion for FY 2025, reflecting its broad geographic and product diversification. Net income stood at €149 million, with diluted EPS of €0.34, indicating modest profitability amid competitive and capital-intensive industry dynamics. Operating cash flow was robust at €972 million, though capital expenditures of €482 million highlight ongoing investments in innovation and capacity. The company’s ability to generate cash supports its operational flexibility and debt management.

Earnings Power And Capital Efficiency

Alstom’s earnings power is underpinned by a mix of high-margin services and rolling stock sales, though net margins remain thin due to industry cost pressures. The company’s capital efficiency is evident in its ability to deploy resources toward growth initiatives, including R&D and strategic acquisitions, while maintaining liquidity. Operating cash flow coverage of capital expenditures suggests disciplined financial management.

Balance Sheet And Financial Health

Alstom’s balance sheet shows €2.27 billion in cash and equivalents against total debt of €3.52 billion, indicating manageable leverage. The company’s liquidity position supports its operational needs and investment plans. With no dividend payouts, Alstom retains flexibility to reinvest in growth or reduce debt, aligning with its capital allocation priorities.

Growth Trends And Dividend Policy

Alstom’s growth is driven by global rail modernization and urbanization trends, with a focus on sustainable mobility solutions. The company does not currently pay dividends, opting to reinvest cash flows into R&D and market expansion. Future growth may hinge on large-scale infrastructure projects and adoption of its green technologies.

Valuation And Market Expectations

With a market cap of €8.53 billion and a beta of 1.285, Alstom is viewed as a moderately volatile play on rail infrastructure growth. Investors likely price in expectations for margin improvement and order book expansion, given the long-term nature of its contracts and backlog visibility.

Strategic Advantages And Outlook

Alstom’s strategic advantages include its global scale, technological leadership in sustainable rail solutions, and a diversified service-driven revenue base. The outlook remains positive, supported by infrastructure stimulus and decarbonization trends, though execution risks and supply chain challenges warrant monitoring.

Sources

Company filings, Bloomberg