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Knorr-Bremse (KNRRY)
OTHER OTC:KNRRY
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Knorr-Bremse
(OTC:KNRRY)
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Rating:73Outperform
Price Target:
$30.00
▲(1.83% Upside)
Action:ReiteratedDate:12/18/25
Knorr-Bremse's overall stock score reflects strong technical indicators and positive earnings call insights, which are slightly offset by valuation concerns and financial performance risks. The company's strategic initiatives and market positioning support future growth, but attention to leverage and cash flow is necessary.
Positive Factors
Strategic Acquisitions
The acquisition of Duagon is expected to enhance Knorr-Bremse's RVS segment and unlock synergies in electronics, supporting growth in Railway Electronics and Signaling technology units.
Operational Efficiency
The operating EBIT margin improved by 100 basis points year-over-year, marking the best profitability in the last 16 quarters, indicating strong operational efficiency.
Free Cash Flow Generation
Free cash flow in Q3 was robust at EUR 159 million with a cash conversion rate of 104%, demonstrating effective cash generation and financial health.
Negative Factors
Declining Gross Profit Margins
The decline in gross profit margins suggests pressure on cost management, which could impact long-term profitability if not addressed.
Increased Leverage
Increased leverage can strain financial flexibility and elevate risk, potentially affecting the company's ability to invest in growth opportunities.
Challenges in North American Truck Market
Significant challenges in the North American truck market could hinder growth in the CVS segment, affecting overall revenue and profitability.
Knorr-Bremse (KNRRY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$18.76B
Dividend Yield1.78%
Average Volume (3M)221.00
Price to Earnings (P/E)29.6
Beta (1Y)0.68
Revenue Growth0.15%
EPS Growth-26.41%
CountryUS
Employees29,051
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)0.22
Shares Outstanding644,800,000
10 Day Avg. Volume0
30 Day Avg. Volume221
Financial Highlights & Ratios
PEG Ratio-1.29
Price to Book (P/B)3.69
Price to Sales (P/S)1.43
P/FCF Ratio16.15
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue2.31
Enterprise Value/Gross Profit4.92
Enterprise Value/Ebitda11.50
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.34
Revenue Forecast (FY)$9.69B
Knorr-Bremse Business Overview & Revenue Model
Company DescriptionKnorr-Bremse Aktiengesellschaft develops, produces, markets, and services braking and other systems for rail and commercial vehicles worldwide. The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems. It offers braking, entrance and HVAC systems; power electrics and control technology; digital solutions for optimization of rail traffic, couplers; signal systems; stationary and mobile testing equipment; wiper and wash systems; and sanitary systems for mass transit and long distance rail vehicles. The company also provides braking systems comprising brake control systems, disk brakes, drum brakes, brake cylinders, valves and pedal units; steering systems and vehicle dynamics solutions; driver assistance systems; automated driving and electronic leveling control; energy supply and distribution systems, including compressors and air treatment products; and engine components and transmission control systems for trucks, buses, trailers, and agricultural machinery. In addition, it offers leasing, holding, logistics, and media and IT services. The company was founded in 1905 and is headquartered in Munich, Germany. Knorr-Bremse Aktiengesellschaft is a subsidiary of KB Holding GmbH.
How the Company Makes MoneyKnorr-Bremse generates revenue primarily through the sale of its braking systems and related components to manufacturers of rail vehicles and commercial vehicles. The company earns income from both original equipment manufacturing (OEM) sales and aftermarket services, including maintenance and repair parts for existing systems. Key revenue streams include contracts with major automotive and rail manufacturers, as well as partnerships with public transportation networks that rely on Knorr-Bremse's technology for safety and efficiency. Additionally, the demand for innovative and eco-friendly transportation solutions, along with regulatory requirements for safety, supports the company's earnings growth.
Knorr-Bremse Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presents a strong operational and financial performance for FY2025: management delivered on guidance, recorded a company-best free cash flow, materially delevered the balance sheet, improved margins (notably in Rail) and progressed BOOST portfolio and efficiency initiatives. There are notable challenges — a still-weak North American truck OE market, Q4 order volatility (RVS), and a planned but not-yet-completed HVAC disposal — and China is expected to normalize slightly in 2026. Overall, the positive execution on margins, cash generation, deleveraging and strategic portfolio moves significantly outweigh the outlined headwinds, and management signals continued disciplined, margin-accretive growth and clear guardrails for M&A.Q4-2025 Updates
Positive Updates
Record Free Cash Flow and Exceptional Cash Conversion
Generated a record operating free cash flow of EUR 790 million in FY2025 (Q4 = EUR 471 million); cash conversion reached 131% (would be ~138% excluding ~EUR 80 million one-offs for severance).
Revenue and Group Margin Improvement; Guidance Delivered
Total revenues of almost EUR 8.0 billion, slight organic growth year-over-year; group operating EBIT margin increased by 70 basis points to 13%; company achieved full-year 2025 guidance and issued a solid 2026 outlook.
Rail Division Outperformance — Midterm Margin Target Achieved Early
Rail (RVS) reached a 16.5% operating margin (midterm target hit one year early), RVS now ~55% of group revenues; Q4 RVS margin improved 140 bps to 17%; year-end backlog ~EUR 5.6 billion (organically +~9%).
Order Intake and Backlog Growth
Group order intake and backlog grew organically by ~6% and ~8% year-over-year respectively, underpinning visibility for 2026; book-to-bill around 1 for the year.
Balance Sheet Strength and Deleveraging
Equity almost EUR 3.2 billion (equity ratio ~36%); net debt reduced ~31% to EUR 627 million; net debt-to-EBITDA at a very comfortable level just below 0.5; liquidity operationally increased ~15% despite bond repayment.
Portfolio Optimization via BOOST — Improved Profitability and Cost Base
BOOST fix-it/sell-it measures improved breakeven by ~400 basis points; divested businesses with >EUR 400 million revenues so far and expect up to EUR 750 million when HVAC sale completes; added ~EUR 600 million in revenue with margins >=15%; headcount reduced by >2,400 employees (majority through real reductions).
Return on Capital and Capital Efficiency Gains
ROCE improved by ~200 basis points to 22.8%; CapEx at EUR 319 million (4.1% of revenues), down EUR 30 million year-over-year; net working capital improved (reduction of ~EUR 85 million, >3 days).
Truck Division (CVS) Operational Resilience and Service Growth
CVS Q4 order intake ~EUR 977 million (≈+10% YoY, organic ≈+20%), Q4 operating EBIT margin improved 180 bps to 11.3%; company targets CVS operating margin ~12% in 2026 and low- to mid-single-digit organic revenue growth for CVS in 2026 driven by Europe and APAC.
Sustainability Progress
Scope 1 & 2 CO2 emissions down 79% since 2018; self-produced renewable power up 41%; taxonomy-aligned revenues increased slightly; strong external ESG validations and green bond reporting.
Clear 2026 Guidance
FY2026 guidance: revenues EUR 8.0–8.3 billion, group EBIT margin ~14%, and free cash flow EUR 750–850 million; update to midterm targets planned with Q2 results (end of July).
Negative Updates
North America Truck Market Weakness and CVS Revenue Headwinds
CVS full-year revenues declined nominally ~4% to EUR 881 million; OE business down ~EUR 30 million YoY driven by North America; North America aftermarket down ~10% (though organic trends slightly better); market still viewed as bottoming with gradual recovery expected.
RVS Q4 Order Intake Decline and Quarter-to-Quarter Volatility
RVS order intake declined ~10% YoY in Q4 (driven by all regions except China) and Q4 book-to-bill dipped to 0.91; management noted a mid-double-digit million order in North America was shifted into 2026 (example of quarter timing risk).
China Normalization Risk
Management expects Chinese rail business to normalize in 2026 after strong 2024–2025; potential revenue reduction of around EUR 30–50 million vs. 2025 is possible (slightly weaker metro demand cited).
HVAC Business Held for Sale — Uncertainty on Realization
HVAC is classified as asset held for sale and sale is advanced but not guaranteed; management prefers a long-term sustainable solution rather than a hurried disposal, which could delay realization of the promised ~EUR 750 million sell-it proceeds.
Exposure to Geopolitical and Market Uncertainties
Geopolitical uncertainties and past headwinds in countries such as China and Russia plus previous inflation impacts were cited as drivers behind prior revenue and fixed-cost pressure; these factors remain background risks.
Quarter Sensitivity and Timing Risks for Large Projects
Several examples in the call highlight that large project timing (signings shifting between quarters) can materially affect quarterly order intake and book-to-bill, creating short-term volatility in reported figures.
Liquidity Movement Due to Debt Repayment
Reported liquidity decreased to around EUR 1.7 billion primarily due to repayment of a EUR 750 million bond; while net debt improved materially, the near-term liquidity position was affected by this financing action.
Company Guidance
Management guided FY‑2026 to group revenues of EUR 8.0–8.3bn, an operating EBIT margin of 14% and free cash flow of EUR 750–850m, with updated mid‑term targets to be published with Q2 results on 30 July; rail (RVS) is expected to record quarterly order intake of ~EUR 1.0–1.2bn and a full‑year book‑to‑bill around 1 (RVS Q4 ’25 margin 17%, FY ’25 RVS margin 16.5%), with an FY‑26 RVS operating margin slightly below 17.5% (including HVAC), while CVS is forecast to deliver low‑ to mid‑single‑digit organic revenue growth and to improve operating EBIT margin toward ~12% in 2026 (CVS FY ’25 margin 10.4%, Q4 ’25 margin 11.3%; Q4 CVS order intake EUR 977m, book‑to‑bill 1.1); management also reiterated capex guidance of ~4–5% of revenues (CapEx ’25 EUR 319m = 4.1%), expects typical seasonal cash conversion in 2026 after a record FCF of EUR 790m and 131% cash conversion in 2025, and confirmed financial flexibility (YE‑25 net debt EUR 627m, net‑debt/EBITDA ~0.5) to support selective, margin‑accretive M&A.Knorr-Bremse Financial Statement Overview
Summary
Knorr-Bremse demonstrates solid financial performance with consistent revenue growth and strong operational margins. However, declining gross profit margins and increased leverage pose risks. The cash flow situation requires attention, particularly in improving free cash flow generation.Income Statement
Knorr-Bremse's income statement shows a stable revenue growth rate of 3.69% in the TTM period, indicating a positive trajectory. The gross profit margin has decreased from 53.75% in 2024 to 46.45% in the TTM, which suggests some pressure on cost management. However, the EBIT and EBITDA margins remain strong at 9.83% and 14.81%, respectively, reflecting operational efficiency. The net profit margin is slightly lower at 5.37%, indicating room for improvement in net profitability.75
Positive
Balance Sheet
The balance sheet reveals a moderate debt-to-equity ratio of 1.08 in the TTM, which is slightly higher than previous years, indicating increased leverage. The return on equity (ROE) is healthy at 14.04%, though it has decreased from 19.48% in 2023, suggesting a slight decline in profitability relative to equity. The equity ratio stands at 34.49%, showing a balanced capital structure but with potential risks if leverage continues to rise.70
Positive
Cash Flow
Cash flow analysis indicates a decline in free cash flow growth by 3.40% in the TTM, which could be a concern for liquidity. The operating cash flow to net income ratio is 0.43, suggesting that operating cash generation is lower relative to net income. The free cash flow to net income ratio is 0.77, indicating that a significant portion of net income is converted into free cash flow, though this has room for improvement.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.82B | 7.88B | 7.93B | 7.15B | 6.71B | 6.16B |
| Gross Profit | 3.68B | 4.24B | 4.02B | 3.52B | 3.45B | 3.26B |
| EBITDA | 1.57B | 1.53B | 1.21B | 1.05B | 1.21B | 1.06B |
| Net Income | 434.66M | 445.00M | 552.53M | 489.28M | 621.31M | 495.50M |
Balance Sheet | ||||||
| Total Assets | 8.81B | 9.61B | 8.25B | 8.01B | 7.20B | 7.39B |
| Cash, Cash Equivalents and Short-Term Investments | 1.40B | 2.35B | 1.29B | 1.45B | 1.44B | 2.32B |
| Total Debt | 3.14B | 3.17B | 2.76B | 2.68B | 2.15B | 2.98B |
| Total Liabilities | 5.68B | 6.49B | 5.35B | 5.32B | 4.77B | 5.47B |
| Stockholders Equity | 3.04B | 3.04B | 2.84B | 2.56B | 2.33B | 1.83B |
Cash Flow | ||||||
| Free Cash Flow | 770.53M | 696.00M | 540.00M | 189.41M | 579.96M | 674.34M |
| Operating Cash Flow | 1.07B | 1.04B | 914.59M | 541.55M | 975.49M | 1.04B |
| Investing Cash Flow | -269.95M | -750.00M | -410.64M | -505.00M | -534.37M | -576.39M |
| Financing Cash Flow | -1.15B | 630.00M | -397.67M | -160.81M | -1.42B | -10.37M |
Knorr-Bremse Technical Analysis
Neutral
29.46
Price Trends
30.32
Negative
27.94
Positive
26.33
Positive
Market Momentum
-0.55
Positive
42.70
Neutral
17.52
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KNRRY, the sentiment is Neutral. The current price of 29.46 is below the 20-day moving average (MA) of 31.02, below the 50-day MA of 30.32, and above the 200-day MA of 26.33, indicating a neutral trend. The MACD of -0.55 indicates Positive momentum. The RSI at 42.70 is Neutral, neither overbought nor oversold. The STOCH value of 17.52 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KNRRY.
Knorr-Bremse Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $18.76B | 29.62 | 18.07% | 1.78% | 0.15% | -26.41% | |
72 Outperform | $5.90B | 14.06 | 8.79% | 2.63% | -1.90% | -13.86% | |
72 Outperform | $2.26B | 12.87 | 13.90% | 0.57% | -4.03% | -39.51% | |
69 Neutral | $7.63B | 9.90 | 29.57% | 2.60% | 0.84% | 26.17% | |
62 Neutral | $10.78B | 35.20 | 4.80% | 1.24% | 0.08% | -83.69% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
54 Neutral | $14.92B | 101.80 | 1.78% | ― | 2.16% | -85.91% |
* Consumer Cyclical Sector Average
KNRRY
Knorr-Bremse
29.18
3.68
14.43%
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BWA
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APTV
Aptiv
70.13
7.40
11.80%
LEA
Lear
116.21
23.02
24.70%
VC
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84.45
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5.33%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.