Einhell Germany AG Receives Buy Rating Despite Mixed Financial Performance

Einhell Germany AG, a prominent player in the tool industry, recently had its financial metrics and stock potential evaluated by NuWays AG, which advised a "Buy" recommendation with a target price of €227 and an investment horizon of 12 months. Despite a slowdown in the fourth quarter, compared to previous quarters, Einhell achieved year-over-year sales of €972 million, marking a 6% decrease.

Regionally, sales in DACH witnessed an 8.1% decline, affected by subdued consumer interest. However, Western and Eastern Europe showed growth of 7.2% and 17.8% respectively. The overseas markets saw a considerable drop of 16.7%, primarily due to currency fluctuations and decreased consumer interest in areas like Australia.

The improvement in gross margin, rising 2.8 percentage points to 43.2%, was supported by relaxed supply chain barriers and an increased share of Power X-Change products, having a positive mix effect. Despite these wins, the EBT (Earnings Before Taxes) decreased by 31% year-over-year to €12.6 million in Q4, though full-year EBT was €75.4 million.

Looking forward, Einhell projects a sales increase of 6% for FY24, with expectations to normalize operations in challenging markets and expand the Power X-Change platform internationally. Earnings before taxes are expected to range between 7.5-8.0%, potentially achieving an EBT of €77-82 million. The company is positioned favorably with a price-to-earnings ratio of 9.6 based on forecasts for 2024 and a free cash flow yield of 10.5%.