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Schneider Electric (SBGSY)
OTHER OTC:SBGSY
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Schneider Electric SE
(OTC:SBGSY)
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Rating:73Outperform
Price Target:
$63.00
â–²(8.88% Upside)
Action:UpgradedDate:03/01/26
The score is driven primarily by strong operating profitability and reliable free-cash-flow generation, reinforced by upbeat 2026 guidance and strong backlog-driven visibility. Offsetting factors are elevated valuation (high P/E with modest yield) and technically overextended momentum signals that raise near-term downside risk, alongside rising leverage and recent revenue softness.
Positive Factors
Free Cash Flow Strength
Consistently high free cash flow and >100% cash conversion provide durable funding for capital allocation, deleveraging, and strategic investments. Reliable cash generation supports resilience through cycles and enables sustained reinvestment in digital and service initiatives over the next 2–6 months and beyond.
Backlog and Revenue Visibility
A record backlog above €25bn creates multi‑quarter revenue visibility, especially in large data‑center and systems projects. This backlog underpins near‑term organic growth targets and reduces execution risk, improving predictability of top‑line and capacity planning over the medium term.
Recurring & Digital Revenue Mix
A large and growing digital/recurring base (software, services, ARR) shifts mix toward higher‑margin, sticky revenue. This structural move improves revenue quality, supports cross‑sell to installed base, and enhances margin sustainability as product sales cyclicality is smoothed by recurring streams.
Negative Factors
Rising Leverage
Higher leverage reduces balance sheet flexibility if top‑line softens, increasing interest and refinancing exposure. With operating cash flow covering a limited portion of total debt, sustained leverage elevation could constrain strategic moves and amplify downside risk if free cash flow weakens.
Gross Margin Pressure
Commodity, tariff and mix headwinds that reduced gross margin are structural operational risks. If pricing pass‑through and mix normalization lag, margin expansion targets may be delayed, limiting sustained operating leverage and constraining the company’s ability to fund margin initiatives organically.
Software Transition & Monetization Complexity
Migrating to subscription/token pricing can pressure near‑term recognition and margins and requires execution discipline. Monetization complexity risks slower cash realization, customer churn or contract renegotiation, and added implementation costs that can temper software margin improvement over the medium term.
Schneider Electric SE (SBGSY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$160.18B
Dividend Yield1.51%
Average Volume (3M)75.44K
Price to Earnings (P/E)31.6
Beta (1Y)1.18
Revenue Growth8.49%
EPS Growth11.63%
CountryUS
Employees155,822
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.09
Shares Outstanding2,885,612,500
10 Day Avg. Volume33,801
30 Day Avg. Volume75,437
Financial Highlights & Ratios
PEG Ratio-12.64
Price to Book (P/B)5.44
Price to Sales (P/S)3.28
P/FCF Ratio27.07
Enterprise Value/Market Cap0.95
Enterprise Value/Revenue3.80
Enterprise Value/Gross Profit9.30
Enterprise Value/Ebitda19.09
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)2.3
Revenue Forecast (FY)$50.56B
Schneider Electric SE Business Overview & Revenue Model
Company DescriptionSchneider Electric S.E. provides energy and automation digital solutions worldwide. It operates through two segments, Energy Management and Industrial Automation. The company offers busway and cable support products, circuit breakers and switches, contactors and protection relays, electrical protection and control products, energy management software solutions, transfer switches, surge protection and power conditioning products, power monitoring and control products, power quality and power factor correction products, pushbuttons, switches, pilot lights and joysticks, software products, and switchboards and enclosures. It also provides access control, building management, fire detection, sensors and room units, valve and valve actuator, and variable and frequency speed drive. In addition, the company offers feeder automation, grid automation and SCADA software products, medium voltage switchgears and transformers, outdoor equipment, substation automation products, and switchgear components. Further, it provides critical power and cooling services, data center software, IT power distribution products, prefabricated data center modules, racks and accessories, and security and environmental monitoring products; home automation and security, installation materials and systems, light switches and electrical sockets, and uninterruptible power supply products; and human machine interface, industrial automation software, industrial communication, measurement and instrumentation, motion control and robotics, signaling units, programmable logic and automation controllers, power supply and protection, process control and safety, RFID systems, signaling devices, and other industrial automation and control products, as well as solar and energy storage. The company was founded in 1836 and is headquartered in Rueil-Malmaison, France.
How the Company Makes MoneySchneider Electric makes money primarily by selling a mix of hardware, software, and services used to manage electricity and automate operations.
1) Product (hardware) revenue: A significant portion of revenue comes from manufacturing and selling electrical distribution and control products (e.g., switchgear, circuit protection, power distribution and monitoring equipment), building and data-center power and cooling-related electrical solutions, and industrial automation products (e.g., controllers, drives, sensors, and related equipment). These are typically sold through a combination of direct sales to large customers (industrial firms, data centers, utilities, infrastructure projects) and an indirect channel of distributors, system integrators, installers, panel builders, and electrical/industrial wholesalers.
2) Software and digital revenue: Schneider Electric generates revenue from software used for industrial automation, electrical design/operation, energy management, and operational monitoring/optimization. This can include license sales and/or subscription-based models depending on the software offering. Digital platforms and analytics can also be bundled with hardware projects or sold as standalone solutions.
3) Services revenue: The company earns service revenue from consulting, design/engineering, installation/commissioning support, maintenance contracts, retrofits/modernization, training, and other lifecycle services tied to customer assets (e.g., electrical systems, automation systems, and facility/data-center infrastructure). Services can be sold as one-time engagements or as recurring service agreements.
4) Project and systems revenue: For complex customer needs (such as data centers, large buildings, industrial facilities, and infrastructure), Schneider Electric can deliver integrated solutions that combine hardware, software, and services. Revenue is earned through project delivery, system integration, and ongoing support tied to those deployments.
5) Key factors influencing earnings: Revenue is influenced by end-market demand across buildings, data centers, infrastructure, and industrial segments; capital spending cycles; energy efficiency and electrification trends; and the company’s ability to attach software and recurring services to its installed base. Specific material partnerships are null.
Schneider Electric SE Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Positive
Overall the call was constructive and optimistic: Schneider reported record revenues (>EUR 40B), strong Q4 acceleration, robust free cash flow (EUR 4.6B) and a record backlog (>EUR 25B), alongside digital and sustainability progress. Management acknowledged material near-term headwinds — gross margin pressure from raw materials, tariffs and mix, FX translation impacts, restructuring and some impairments, and ongoing China deflation — but provided concrete 2026 targets (organic revenue 7–10%, adjusted EBITA growth 10–15%, margin expansion 50–80 bps) and action plans (pricing ramp, simplification, regionalization, gross‑margin initiatives) intended to address these issues. Given the magnitude and number of positive operating and financial achievements and the clear mitigation plans, the highlights outweigh the disclosed challenges.Q4-2025 Updates
Positive Updates
Record Annual Revenue
Schneider Electric exceeded EUR 40 billion in full-year 2025 revenues (EUR 40.2B), up +9% organic year-over-year — the first time the company surpassed the EUR 40B milestone.
Strong Q4 Finish
Q4 revenues reached ~EUR 11 billion, with quarter organic growth of ~10.7%–11% and strong sequential acceleration across both businesses (systems +19% in Q4, software & services +10% organic in Q4).
Record Backlog and Data Center Visibility
Year-end backlog exceeded EUR 25 billion, up ~18% (not constant currency), providing 18–24 months of visibility in data center projects and supporting revenue visibility into 2026–2027.
Profitability and Margin Progress
Adjusted EBITA grew +12.3% (within the 10–15% target) and the group delivered a +50 basis-point expansion in adjusted EBITDA margin organically for 2025.
Strong Free Cash Flow and Cash Conversion
Free cash flow of EUR 4.6 billion with a cash conversion ratio slightly above 110% (reported conversion ~106% or 111% including noncash impairments), marking the third consecutive year above EUR 4B.
Digital & Recurring Revenue Momentum
Digital flywheel revenue reached EUR 25 billion (62% of total revenue) and grew +15% year-over-year; services and software are close to 20% of the portfolio with AVEVA ARR growth of +12%.
Business Mix Strength — Energy Management & Industrial Automation
Energy Management grew slightly above +10% for the year (fifth consecutive year of double-digit growth); Industrial Automation returned to full-year growth (+3%) with H2 growth of +7% supporting recovery.
Sustainability & People Metrics
Reported cumulative 'saved and avoided' CO2 of 862 million tonnes since program inception and expanded access-to-clean-energy reach to 61 million people; employee share ownership strong (63% participation globally).
2026 Financial Targets and Strategic Guidance
Management set 2026 targets: organic revenue growth 7–10%, adjusted EBITA growth 10–15%, and organic adjusted EBITDA margin expansion of 50–80 bps (full-year margin target ~19.1–19.4%); reiterated strategic priorities (AI, regional hubs, gross‑margin programs).
Negative Updates
Gross Margin Pressure
Group gross margin came in at 42.1%, down ~40 basis points organically versus prior year; management cited tariffs, raw material inflation (notably copper and silver), and negative mix (systems vs. products) as primary headwinds.
FX Headwinds
Currency movements (USD depreciation) produced a negative FX impact in 2025 and management expects a continued 2026 revenue headwind of approximately -€850M to -€950M and ~-10 bps on adjusted EBITDA margin at current rates.
Net Income and Non‑operational Charges
Reported net income declined ~-2% (reported) with adjusted net income up +4% reported (+14% organic); non-operational items included ~EUR 100M of H2 impairments and higher financing/PPA costs impacting reported profitability.
Restructuring and Near‑term Costs
Restructuring and simplification costs rose to nearly EUR 300M in 2025 tied to the simplification program; these are front-loaded to drive future SFC-to-sales reductions (-1.5 to -2 pts target between 2026–2030).
Industrial Automation Margin Lag
Industrial Automation adjusted EBITDA margin remained modest at ~14.2% (improvement only ~10 bps organic) with prior-period operating deleverage in H1 2025 and ongoing mix and transition impacts (AVEVA subscription transition) constraining margin expansion.
China Deflation and Market Headwinds
China remained deflationary in 2025 (low single-digit growth there for the year) with building/construction markets subdued; management noted tentative signs of pricing starting, but China deflation was a headwind to group pricing/margins.
Timing of Price Cost Pass‑Through
While management plans to be net price positive in 2026 and turn gross margin positive during the year, they warned of flat-to-negative gross margin progression in H1 2026 given timing of pricing, tariffs, and raw material moves.
Software Transition and Short‑term Disruption Risk
AVEVA/OSI subscription transitions and the broader move to more AI-driven software models create short-term margin and monetization complexity (token/flex pricing models being adopted), with potential disruption risks to certain UI-based software layers.
Company Guidance
Schneider guided 2026 to 7–10% organic revenue growth and 10–15% adjusted EBITA growth, targeting an organic adjusted EBITDA margin improvement of 50–80 basis points (implying a full‑year margin of roughly 19.1–19.4%); management expects gross margin to turn positive during 2026 as pricing is ramped (H1 may remain flat/negative due to tariff/RMI timing), will be supported by a record backlog >€25bn (up 18%) and strong data‑center visibility, and flags an FX headwind of ~€850–950m on revenues (≈‑10bps on adjusted EBITDA) — cash conversion is targeted around 100% (after €4.6bn FCF and ~106–111% conversion in 2025) while ongoing simplification (≈€300m restructuring in 2025) aims to deliver −1.5 to −2.0pp improvement in SFC‑to‑sales through 2030.Schneider Electric SE Financial Statement Overview
Summary
Strong and improving profitability (EBIT margin rising to ~17.5% by 2025) and consistently solid free cash flow conversion (~82.5% of net income in 2025). Offsetting these strengths are slowing momentum (2025 revenue -1.9% and net income down vs 2024) and higher leverage (debt-to-equity up to ~0.73 in 2025), which reduces flexibility if growth remains soft.Income Statement
Schneider Electric shows solid profitability for an industrial company, with gross margin holding around ~39–43% and operating profitability improving versus 2020 (EBIT margin rising from ~12.0% in 2020 to ~17.5% in 2025). Net margin remains healthy around ~10–11% across most years. The main watch-out is growth momentum: revenue expanded strongly from 2021–2023, but slowed in 2024 and turned slightly negative in 2025 (-1.9%), and net income also dipped versus 2024 despite higher operating margins.78
Positive
Balance Sheet
The balance sheet is generally sound with good profitability on shareholder capital (return on equity in the mid-teens, ~16.5% in 2025). Leverage is moderate but trending higher: debt-to-equity increased from ~0.44 (2021) to ~0.73 (2025), driven by rising debt and lower equity versus 2024. Total assets are stable, but the leverage uptick reduces flexibility if the softer revenue trend persists.70
Positive
Cash Flow
Cash generation is a strength: free cash flow is consistently positive and closely tracks earnings (free cash flow is ~75–83% of net income across the period, ~82.5% in 2025). 2025 free cash flow growth is strong (+15.6%), following generally steady performance in prior years. A weaker point is that cash flow is not large relative to the debt load (operating cash flow covers ~32% of total debt in 2025), so the company benefits from maintaining strong cash conversion to keep leverage in check.81
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 40.15B | 38.15B | 35.90B | 34.18B | 28.91B |
| Gross Profit | 16.49B | 16.27B | 14.62B | 13.40B | 11.35B |
| EBITDA | 8.68B | 7.39B | 7.19B | 6.36B | 5.34B |
| Net Income | 4.16B | 4.27B | 4.00B | 3.48B | 3.20B |
Balance Sheet | |||||
| Total Assets | 62.48B | 65.94B | 58.90B | 58.37B | 54.55B |
| Cash, Cash Equivalents and Short-Term Investments | 4.63B | 6.89B | 4.70B | 3.99B | 2.63B |
| Total Debt | 17.74B | 16.31B | 13.93B | 11.73B | 10.84B |
| Total Liabilities | 38.03B | 34.66B | 31.73B | 32.27B | 26.44B |
| Stockholders Equity | 24.19B | 30.49B | 26.46B | 25.44B | 24.44B |
Cash Flow | |||||
| Free Cash Flow | 4.86B | 4.63B | 4.54B | 3.26B | 2.74B |
| Operating Cash Flow | 5.89B | 5.58B | 5.91B | 4.35B | 3.62B |
| Investing Cash Flow | -7.93B | -1.99B | -1.05B | -1.41B | -5.17B |
| Financing Cash Flow | 293.92M | -1.62B | -3.82B | -1.45B | -3.09B |
Schneider Electric SE Technical Analysis
Negative
57.86
Price Trends
58.32
Negative
56.77
Negative
54.84
Positive
Market Momentum
-0.30
Positive
41.53
Neutral
20.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBGSY, the sentiment is Negative. The current price of 57.86 is below the 20-day moving average (MA) of 60.54, below the 50-day MA of 58.32, and above the 200-day MA of 54.84, indicating a neutral trend. The MACD of -0.30 indicates Positive momentum. The RSI at 41.53 is Neutral, neither overbought nor oversold. The STOCH value of 20.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SBGSY.
Schneider Electric SE Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $112.32B | 32.82 | 25.65% | 0.79% | 0.22% | 26.66% | |
79 Outperform | $49.11B | 31.97 | 14.26% | 0.59% | 3.67% | 10.44% | |
76 Outperform | $137.86B | 30.24 | 21.67% | 1.29% | 8.24% | 6.21% | |
73 Outperform | $160.18B | 31.60 | 16.28% | 1.51% | 8.49% | 11.63% | |
69 Neutral | $74.36B | 30.81 | 11.61% | 1.58% | 2.97% | 18.14% | |
68 Neutral | $40.55B | 35.94 | 27.69% | 1.33% | 0.98% | -7.51% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
SBGSY
Schneider Electric SE
56.76
6.98
14.02%
AME
Ametek
214.49
36.74
20.67%
ETN
Eaton
355.40
61.77
21.04%
EMR
Emerson Electric Company
132.24
20.51
18.36%
PH
Parker Hannifin
889.86
273.98
44.49%
ROK
Rockwell Automation
360.93
102.90
39.88%
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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.
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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.