Stock Analysis & Valuation Alstom S.A. (ALO.PA)

• Previous Close: €27.02
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	46.98	74
Intrinsic value (DCF)	12.35	-54
Graham-Dodd Method	3.97	-85
Graham Formula	4.42	-84

Strategic Investment Analysis

Company Overview

Alstom SA (ALO.PA) is a global leader in rail transport solutions, headquartered in Saint-Ouen, France. Specializing in rolling stock, signaling, and maintenance services, Alstom serves markets across Europe, the Americas, Asia-Pacific, the Middle East, and Africa. The company provides a comprehensive portfolio, including high-speed trains, metros, trams, and locomotives, alongside digital mobility and electrification solutions. With a strong focus on sustainability and innovation, Alstom is a key player in the transition toward greener urban and intercity transportation. Its expertise in rail infrastructure modernization and digital connectivity positions it as a critical enabler of smart city initiatives. As governments worldwide invest in rail expansion and decarbonization, Alstom stands to benefit from long-term infrastructure projects. The company’s diversified revenue streams—spanning manufacturing, services, and digital solutions—reinforce its resilience in the industrials sector.

Investment Summary

Alstom presents a compelling investment case due to its leadership in sustainable rail transport and exposure to global infrastructure spending. The company’s €18.5B revenue base and €149M net income (FY 2025) reflect steady demand, though diluted EPS of €0.34 suggests modest profitability. Operating cash flow (€972M) and a solid cash position (€2.27B) provide liquidity, but total debt (€3.52B) warrants monitoring. With a beta of 1.285, Alstom is more volatile than the market, aligning with cyclical industrials. The lack of dividends may deter income investors, but growth-oriented shareholders could benefit from rail’s long-term tailwinds, including urbanization and decarbonization policies. Risks include supply chain disruptions, project execution delays, and geopolitical tensions affecting international operations.

Competitive Analysis

Alstom’s competitive advantage lies in its integrated rail solutions, combining rolling stock, signaling, and services under one umbrella. Its acquisition of Bombardier Transportation in 2021 expanded its market share, particularly in Europe and North America, enhancing economies of scale. The company’s strength in high-speed rail (e.g., TGV, Pendolino) and metro systems (e.g., Citadis trams) differentiates it from pure-play manufacturers. Alstom’s focus on digital mobility (e.g., predictive maintenance, AI-driven signaling) aligns with industry trends toward automation. However, competition is intense, with rivals like Siemens Mobility and CRRC leveraging larger R&D budgets or state backing. Alstom’s European heritage gives it an edge in EU tenders but exposes it to regulatory complexity. While its service segment (20% of revenue) provides recurring income, margin pressures from fixed-price contracts and raw material costs persist. The company’s ability to win large-scale projects (e.g., Sydney Metro, Egypt Monorail) underscores its global reach but also ties performance to macroeconomic cycles.

Major Competitors

• Siemens Mobility (SIEGn.DE): Siemens Mobility, a division of Siemens AG, is Alstom’s primary rival in rail tech, with strengths in high-speed trains (e.g., Velaro) and signaling (ERTMS). Its parent’s financial backing allows aggressive R&D (e.g., hydrogen trains), but bureaucratic decision-making slows responsiveness. Siemens leads in digital rail solutions (e.g., Railigent), though Alstom matches its product breadth.
• CRRC Corporation (601766.SS): CRRC dominates the global rolling stock market by volume, benefiting from state support and low-cost manufacturing. It undercuts Alstom on price in emerging markets but lags in high-margin signaling and services. CRRC’s limited footprint in Europe/North America (due to trade barriers) reduces direct overlap with Alstom’s core markets.
• Knorr-Bremse AG (KNX): Knorr-Bremse specializes in braking systems and rail components, competing with Alstom’s parts division. Its technological edge in safety-critical systems (e.g., brake control) is offset by narrower product scope. Knorr-Bremse’s B2B focus shields it from project risks but limits exposure to growth in turnkey rail solutions.
• Wabtec Corporation (WAB): Wabtec, via its GE Transportation merger, rivals Alstom in freight locomotives and rail software. Its strong North American service network complements Alstom’s passenger rail focus. Wabtec’s Positive Train Control (PTC) expertise is a niche advantage, though it lacks Alstom’s urban transit portfolio.