Befesa S.A. (BFSA.DE) | Investment Case

1. Company Snapshot

1.a. Company Description

Befesa S.A. provides environmental recycling services to the steel and aluminum industries in European, Asian, and North American markets.It operates through two segments, Steel Dust Recycling Services and Aluminium Salt Slags Recycling Services.The Steel Dust Recycling Services segment collects and recycles steel dust and other steel residues generated in the production of crude, stainless, and galvanized steel.

The Aluminium Salt Slags Recycling Services segment recycles salt slags; spent pot linings, a hazardous residue generated by primary aluminum producers; and recovers and sells salt, aluminum concentrate, and aluminum oxides.This segment also collects and recycles aluminum scrap and other aluminum residues, such as aluminum dross, shavings, and cuttings; and produces secondary aluminum alloys for automotive and construction industries.The company also offers logistics and waelz oxide treatment services; develops projects and technology; and operates as a marketing company.

Befesa S.A. was founded in 1987 and is based in Luxembourg City, Luxembourg.

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1.b. Last Insights on BFSA

Befesa S.A.'s recent performance has been influenced by a significant stake held by institutional investors, who own 45% of the company. This substantial ownership implies that the stock price is sensitive to their trading actions. Additionally, the company's latest quarterly earnings release revealed a miss in analyst estimates, which may have tempered investor enthusiasm. Despite this, Befesa's financial prospects appear weak, raising concerns about overpricing. The company's recent quarterly results have led analysts to revise their forecasts.

1.c. Company Highlights

Last Price	27.82
Change Percentage	1.31%
Open	27.46
Previous Close	27.46
Market Cap ( Millions)	1113
Volume	15480
Year High	31.36
Year Low	19.48
M A 50	28.63
M A 200	27.02

FCF Yield	3.66%
Dividend Yield	2.30%
ROE	5.58%
Debt / Equity	84.06%
Net Debt / EBIDTA	274.48%
Price To Book	1.33
Price Earnings Ratio	24.54
Price To FCF	27.35
Price To sales	0.91
EV / EBITDA	7.83

2. Befesa's Strong Q3 2025 Results Driven by Operational Efficiency

Befesa reported a robust third quarter in 2025, with adjusted EBITDA reaching EUR 174 million, a 15% year-on-year increase. The EBITDA margin improved to 21.3% in Q3 2025, reflecting strong operational efficiency and disciplined cost management. Earnings per share (EPS) rose 143% year-on-year to EUR 1.52, significantly exceeding the actual EPS of '0.3785' in the previous year's corresponding quarter relative to estimates at '0.3942'. The company's financial leverage was reduced to 2.6x, indicating a strong balance sheet.

Publication Date: Dec -02

                                    📋 Highlights
                                    Adjusted EBITDA Growth::
                                                Reached EUR 174 million in Q3 2025, up 15% year-on-year, with EBITDA margin improving to 21.3%.
Steel Dust Segment Performance::
                                                Adjusted EBITDA rose 27% YoY to EUR 54.7 million, driven by lower zinc treatment charges and favorable zinc prices.
EPS Surge::
                                                Earnings per share increased 143% YoY to EUR 1.52, supported by higher net income and disciplined cost management.
Full-Year EBITDA Guidance::
                                                Confirmed at EUR 240–265 million, with Q4 expected stronger than Q3 due to high utilization and no maintenance stoppages.
Financial Leverage Reduction::
                                                Net leverage dropped to 2.6x in Q3 2025, on track to fall below 2.5x by year-end, with CapEx of EUR 80 million prioritizing growth projects like Bernburg (EUR 30 million).

                                

Segmental Performance

The Steel Dust business achieved a strong recovery in Q3 volumes, supported by lower zinc treatment charges and favorable zinc prices, with adjusted EBITDA improving 27% year-on-year. In contrast, the Aluminum Salt Slag Recycling business saw a 26% year-on-year decrease in EBITDA, mainly due to lower aluminum metal margins. Asier Zarraonandia commented that the secondary aluminum business remained challenging due to a weak European automotive market, but Q4 might be better than Q3 due to higher volumes and inventory adjustments.

Outlook and Growth Prospects

Befesa confirmed its full-year 2025 EBITDA guidance in the lower part of the initial range of EUR 240 million to EUR 265 million. The company is well-positioned for growth, with the Palmerton expansion project completed and the Bernburg expansion project progressing as planned. Analysts estimate next year's revenue growth at 10.9%. Asier Zarraonandia highlighted the potential for growth in the U.S. EAF steel dust market, with the refurbished Palmerton plant positioning Befesa to capture this growth.

Valuation and Dividend Policy

The company's valuation metrics indicate a reasonable price for its shares, with a P/E Ratio of 23.95 and an EV/EBITDA of 7.71. Befesa's dividend policy is to pay between 40% to 50% of net income to shareholders, providing a dividend yield of 2.36%. The Net Debt / EBITDA ratio is 2.74, indicating a manageable level of debt. With a ROE of 5.58%, the company is generating returns for its shareholders, although the ROIC is negative at -2.49%.

3. NewsRoom

Is Now An Opportune Moment To Examine Befesa S.A. (ETR:BFSA)?

Dec -02

Source:

Befesa S.A. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Nov -02

Source:

Befesa S.A.'s (ETR:BFSA) On An Uptrend But Financial Prospects Look Pretty Weak: Is The Stock Overpriced?

Oct -29

Source:

Institutional investors own a significant stake of 45% in Befesa S.A. (ETR:BFSA)

Sep -16

Source:

Befesa Second Quarter 2025 Earnings: EPS: €0.54 (vs €0.26 in 2Q 2024)

Aug -05

Source:

Befesa S.A. (ETR:BFSA) Just Released Its Half-Year Earnings: Here's What Analysts Think

Aug -02

Source:

What Does Befesa S.A.'s (ETR:BFSA) Share Price Indicate?

Jun -25

Source:

Befesa S.A.'s (ETR:BFSA) Stock's Been Going Strong: Could Weak Financials Mean The Market Will Correct Its Share Price?

May -19

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.46%)

6. Segments

Steel Dust

Expected Growth: 6%

Befesa S.A.'s Steel Dust segment growth is driven by increasing demand for high-quality steel products, rising steel production in emerging markets, and growing adoption of electric arc furnaces. Additionally, stringent environmental regulations and recycling trends contribute to the segment's growth, as steel dust is a valuable raw material for the production of high-quality steel.

Secondary Aluminium

Expected Growth: 5%

Befesa S.A.'s secondary aluminium growth is driven by increasing demand for sustainable and eco-friendly products, government regulations promoting recycling, and rising aluminium prices. Additionally, the company's strategic expansion into new markets, investments in technology, and cost-saving initiatives contribute to its 5% growth.

Salt Slags

Expected Growth: 4%

Befesa S.A.'s Salt Slags segment growth is driven by increasing demand for environmentally friendly waste management solutions, stringent regulations on industrial waste disposal, and growing adoption of circular economy practices. Additionally, the company's expansion into new markets and strategic partnerships contribute to its growth.

Corporate, Other Minor and Eliminations

Expected Growth: 3%

Befesa S.A.'s 3% growth is driven by Corporate segment's increased focus on sustainability and cost savings, Other Minor segment's expansion into new geographies, and Eliminations segment's improved operational efficiency, resulting in higher margins and profitability.

7. Detailed Products

Aluminum Recycling

Befesa S.A. provides aluminum recycling services, recovering aluminum from waste materials and converting it into high-quality aluminum alloys for use in various industries.

Steel Dust Recycling

Befesa S.A. offers steel dust recycling services, processing steel dust and other residues to recover valuable metals and reduce waste.

Waste Management

Befesa S.A. provides waste management services, collecting, treating, and disposing of hazardous and non-hazardous waste in an environmentally responsible manner.

Water Treatment

Befesa S.A. offers water treatment services, treating and recycling industrial wastewater to reduce environmental impact and promote sustainable practices.

Salt Slag Recycling

Befesa S.A. provides salt slag recycling services, recovering valuable metals and reducing waste from the aluminum smelting process.

8. Befesa S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Befesa S.A. is medium due to the availability of alternative waste management services.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of concentration of buyers in the waste management industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the moderate concentration of suppliers in the waste management industry.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the waste management industry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the waste management industry, leading to intense competition.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	45.50%
Debt Cost	6.01%
Equity Weight	54.50%
Equity Cost	11.72%
WACC	9.12%
Leverage	83.48%

11. Quality Control: Befesa S.A. passed 1 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Lassila & Tikanoja

A-Score: 6.0/10

Value: 6.1

Growth: 2.7

Quality: 3.3

Yield: 7.5

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

Derichebourg

A-Score: 5.3/10

Value: 8.9

Growth: 5.0

Quality: 3.6

Yield: 5.0

Momentum: 5.5

Volatility: 4.0

1-Year Total Return ->

Pizzorno Environnement

A-Score: 4.6/10

Value: 5.7

Growth: 6.2

Quality: 3.9

Yield: 4.4

Momentum: 0.5

Volatility: 6.7

1-Year Total Return ->

Befesa

A-Score: 4.4/10

Value: 4.7

Growth: 5.4

Quality: 2.7

Yield: 3.8

Momentum: 6.5

Volatility: 3.3

1-Year Total Return ->

Séché Environnement

A-Score: 4.4/10

Value: 7.6

Growth: 7.4

Quality: 3.7

Yield: 1.9

Momentum: 2.0

Volatility: 3.7

1-Year Total Return ->

Renewi

A-Score: 4.0/10

Value: 7.2

Growth: 2.7

Quality: 1.5

Yield: 0.0

Momentum: 8.5

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.87%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.12%

Befesa S.A. - LU1704650164

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BFSA

1.c. Company Highlights

Stable Momentum

Medium Volatility

Average Quality

Earnings Miss

Revenues Miss

Weak Momentum

Earnings Beats

Lower Growth

Lower Quality

Average Yield

Average Growth

Fairly Valued

2. Befesa's Strong Q3 2025 Results Driven by Operational Efficiency

Segmental Performance

Outlook and Growth Prospects

Valuation and Dividend Policy

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.46%)

6. Segments

Steel Dust

Expected Growth: 6%

Secondary Aluminium

Expected Growth: 5%

Salt Slags

Expected Growth: 4%

Corporate, Other Minor and Eliminations

Expected Growth: 3%

7. Detailed Products

Aluminum Recycling

Steel Dust Recycling

Waste Management

Water Treatment

Salt Slag Recycling

8. Befesa S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Befesa S.A. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.82$

Current Price

27.82$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA