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1. Company Snapshot

1.a. Company Description

Alfa Laval AB (publ) provides heat transfer, separation, and fluid handling products and solutions worldwide.The company operates in three divisions: Energy, Food & Water, and Marine.It offers oil/gas-fired steam and composite steam boilers, exhaust gas economizer, and ballast water treatment systems, and exhaust gas cleaning products.


The company also provides sensing and control, cleaning validation, condition monitoring, agitators, tank, powder mixers, fittings, and tubes, as well as wall mounted cleaning nozzles, rotary jet and heads; and tank accessories and covers.In addition, the company offers centrifugal, rotary lobe, three screw, twin screw, and circumferential piston pumps.Further, the company provides butterfly, control/check, double seal, diaphragm, double seat, regulating, safety, sampling, shutter, single seat, and ball valves.


Additionally, the company offers heat exchanger, tube-in-tube heat exchangers, and process shell-and-tube heat exchangers.Furthermore, the company provides finned tube air heat, scraped surface heat exchangers, and various plate heat exchangers, wet surface, and HYAC hybrid air coolers.It also offers decanters and separator related products.


The company serves energy, utilities, home, personal care, food, dairy, beverage, marine, transportation, pharma, biotech, water, and wastewater industries.Alfa Laval AB (publ) was founded in 1883 and is headquartered in Lund, Sweden.

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1.b. Last Insights on ALFA

Alfa Laval's recent performance was driven by strong order book and robust cash flow, despite market headwinds in certain segments. The company reported a record order book, indicating a positive outlook for future revenue. Additionally, the acquisition of NRG Marine is expected to advance innovative anti-fouling technology, which is poised to increase in demand. Furthermore, the establishment of a Food Innovation Centre will support food producers in addressing global food challenges. However, the company's ability to navigate market headwinds and execute its growth strategies effectively will be key to its future success.

1.c. Company Highlights

2. Alfa Laval's Q3 '25 Earnings: Strong Sales and Margin Expansion

Alfa Laval reported a robust financial performance in Q3 '25, with sales increasing to SEK 17 billion, representing a strong historical level for the quarter. The company's gross profit improved to 36.8%, driven by better factory and engineering results and positive purchase price variances. The adjusted EBITA margin expanded to 18.4%, a record level, with earnings increasing to SEK 3.2 billion on the EBITA level. Earnings per share (EPS) came in at SEK 5.53, slightly below analyst estimates of SEK 5.75.

Publication Date: Oct -31

📋 Highlights

Segmental Performance

The Energy division posted an EBITA margin of 16.6%, lower than previous quarters due to a shift in mix towards large orders and costs related to the Fives Cryo acquisition. As Tom Erixon noted, "the market dynamics are shifting towards stronger HVAC, heat pump, and data center growth." The Marine division continued to perform well, with a positive mix of invoicing from cargo pumping systems and service, yielding a 23.5% margin.

Outlook and Guidance

Looking ahead, Alfa Laval expects demand to remain sequentially stable in Q4, with the Energy division expected to be higher, Marine somewhat lower, and Food & Water stable compared to Q3. The company's guidance for Q4 includes CapEx of SEK 700 million, and reiterated guidance of SEK 2.5 billion to SEK 3 billion in 2026. Analysts estimate next year's revenue growth at 4.4%.

Valuation

Alfa Laval's current valuation metrics suggest a reasonable price for the stock. The P/E Ratio stands at 23.51, while the P/S Ratio is at 2.78. The EV/EBITDA ratio is 14.58, indicating a moderate valuation. The ROE is 19.57%, and ROIC is 13.69%, indicating a strong return on equity and invested capital. The dividend yield is 1.86%, providing a relatively stable income stream.

Conclusion on Growth Prospects

Alfa Laval's growth prospects appear promising, driven by a stable foundation for organic growth and potential acquisition opportunities. As Tom Erixon stated, "we have a good growth platform installed, and we see a high pace of growth continuing." The company's diversified portfolio and strong market position are expected to drive long-term growth, with a potential increase in demand for clean energy and environmental technologies.

3. NewsRoom

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Is Alfa Laval’s Ammonia Fuel Partnership With Hanwha Ocean Ecotech Shaping Its Green Credentials (OM:ALFA)?

Nov -30

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Alfa Laval teams up with Hanwha Ocean for dual-fuel vessel ammonia systems

Nov -26

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Alfa Laval Capital Markets Day 2025 - strengthening growth and profitability ambitions

Nov -24

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Swedish Industrial Giants Bet Big on Small Modular Nuclear Reactors

Nov -10

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Alfa Laval extends strategic partnership with EDF to accelerate nuclear energy projects in France

Nov -05

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Alfa Laval (OM:ALFA) Net Margin Gains Reinforce Bull Narratives on Valuation

Oct -30

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Alfa Laval and Lund University strengthen strategic partnership to drive innovation and share knowledge

Oct -30

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Are Construction Stocks Lagging D.R. Horton (DHI) This Year?

Oct -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.31%)

6. Segments

Food & Water

Expected Growth: 4%

Alfa Laval's Food & Water segment growth is driven by increasing demand for sustainable food processing, rising global food safety concerns, and growing need for efficient water management solutions. Additionally, the segment benefits from the company's strong brand reputation, innovative product offerings, and expanding presence in emerging markets.

Energy

Expected Growth: 6%

Alfa Laval's 6% growth in Energy segment is driven by increasing demand for heat exchangers and boilers in the oil and gas industry, coupled with growing adoption of renewable energy sources such as solar and biomass. Additionally, the company's focus on energy efficiency and emission reduction solutions contributes to its growth momentum.

Marine

Expected Growth: 3%

Alfa Laval's Marine segment growth is driven by increasing demand for energy-efficient and environmentally friendly solutions, such as ballast water treatment systems and exhaust gas cleaning systems, which support the maritime industry's transition to more sustainable operations. Additionally, the growing need for marine transportation and the increasing adoption of LNG as a fuel source also contribute to the segment's growth.

7. Detailed Products

Heat Exchangers

Alfa Laval's heat exchangers are designed to provide efficient heat transfer in various industries, including HVAC, refrigeration, and power generation.

Pumps

Alfa Laval's pumps are designed for efficient and reliable fluid handling in various industries, including food, pharmaceutical, and chemical processing.

Valves

Alfa Laval's valves are designed for precise control and shut-off in various industries, including oil and gas, chemical processing, and power generation.

Separation Technology

Alfa Laval's separation technology is designed for efficient separation of liquids, gases, and solids in various industries, including food, pharmaceutical, and chemical processing.

Marine Equipment

Alfa Laval's marine equipment is designed for efficient and reliable operation in the marine industry, including propulsion, cooling, and waste management systems.

Air Heat Exchangers

Alfa Laval's air heat exchangers are designed for efficient heat transfer in air-based systems, including HVAC, refrigeration, and power generation.

Filtration Systems

Alfa Laval's filtration systems are designed for efficient and reliable fluid filtration in various industries, including food, pharmaceutical, and chemical processing.

8. Alfa Laval AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Alfa Laval AB (publ) operates in a industry with moderate threat of substitutes. The company's products and services are specialized, but there are some alternatives available in the market.

Bargaining Power Of Customers

Alfa Laval AB (publ) has a diverse customer base, which reduces the bargaining power of individual customers. The company's products and services are also customized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Alfa Laval AB (publ) has a moderate bargaining power of suppliers. The company relies on a few key suppliers for critical components, but it also has some flexibility to switch to alternative suppliers if needed.

Threat Of New Entrants

Alfa Laval AB (publ) operates in an industry with high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to enter the market.

Intensity Of Rivalry

Alfa Laval AB (publ) operates in a highly competitive industry with several established players. The company faces intense competition in terms of pricing, product offerings, and innovation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.00%
Debt Cost 4.33%
Equity Weight 72.00%
Equity Cost 9.67%
WACC 8.18%
Leverage 38.89%

11. Quality Control: Alfa Laval AB (publ) passed 6 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

Stock-Card
Siemens

A-Score: 5.5/10

Value: 3.6

Growth: 5.0

Quality: 5.6

Yield: 5.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Alfa Laval

A-Score: 5.4/10

Value: 2.7

Growth: 6.9

Quality: 6.8

Yield: 3.8

Momentum: 3.0

Volatility: 9.0

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Schindler

A-Score: 5.3/10

Value: 1.1

Growth: 3.9

Quality: 7.2

Yield: 3.1

Momentum: 7.0

Volatility: 9.7

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Eaton

A-Score: 4.5/10

Value: 0.7

Growth: 5.9

Quality: 6.9

Yield: 2.5

Momentum: 6.0

Volatility: 5.0

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KONE

A-Score: 4.3/10

Value: 1.8

Growth: 3.3

Quality: 6.4

Yield: 5.6

Momentum: 6.0

Volatility: 2.7

1-Year Total Return ->

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Schneider Electric

A-Score: 4.3/10

Value: 1.3

Growth: 5.6

Quality: 6.3

Yield: 2.5

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

467.7$

Current Price

467.7$

Potential

-0.00%

Expected Cash-Flows