Bekaert's Buyback Bonanza: Smart Move or Overvalued Gamble?

The steel industry has always been a rollercoaster of booms and busts, but Bekaert NV (BEKB.BR) is betting big that its shares are undervalued—and investors should take notice. The Belgian materials giant has launched a €200 million share buyback program, repurchasing over 700,000 shares since February 2025 alone. Is this a masterstroke to capitalize on an undervalued stock, or a risky move that could backfire in a volatile market? Let’s dissect the numbers.

The Financial Fortitude: Can Bekaert Afford This?

First, the cold, hard facts: Bekaert’s net debt stands at €283 million, with a net debt/EBITDAu ratio of just 0.5x—a rock-solid position. Free Cash Flow (FCF) dipped to €193 million in 2024 due to softer sales, but this remains comfortably above the buyback’s pace. The company’s low leverage and disciplined balance sheet give it room to maneuver even in a downturn.

But here’s the kicker: Bekaert’s buyback isn’t just about repurchasing shares. It’s a sign of confidence in its ability to navigate industry headwinds. The firm has already shed commoditized South American businesses, focusing on higher-margin segments like automotive coatings and advanced wire products.

Industry Crossroads: Steel & Automotive—Boom or Bust?

Bekaert’s fate is tied to two sectors: steel and automotive. Let’s break down the risks and opportunities:

1. Steel: Mixed Signals, But Bekaert is Adapting
   Global steel demand is split. Construction (a major buyer) is booming, with the Dodge Momentum Index hitting record highs due to data center and commercial projects. Yet agricultural equipment sales are cratering—shipments fell 15% in early 2025. Bekaert’s focus on niche markets like stainless steel for EV batteries and high-strength automotive wire positions it to win in the $500 billion automotive materials market, even as traditional sectors slump.

2. Automotive: Tariffs Are a Double-Edged Sword
   The U.S. imposed 25% tariffs on Canadian/Mexican vehicles, threatening North American production. But this also creates opportunities. Bekaert’s Cherry Bekaert division advises auto dealers on tariff compliance and cost optimization, turning regulatory chaos into a revenue stream. Meanwhile, EVs—critical to Bekaert’s coated wire business—are thriving despite cost pressures, with global sales projected to hit 25% of new cars by 2030.

Valuation: Is the Stock Undervalued or Overhyped?

The numbers here are stark. Bekaert trades at an EV/EBITDA of 7.2x, well below its five-year average of 10x. The stock’s fair value estimate of €39.36 suggests a 6.7% upside from its current €36.90 price. Even in a worst-case scenario, the downside risk is limited to 38%, while upside potential hits 58% if the stock hits its high valuation range.

The Bottom Line: Buy Now or Bail?

Bekaert isn’t just buying back shares—it’s making a bold bet on its future. With a fortress balance sheet, strategic divestitures, and a focus on high-margin niches, this buyback isn’t reckless. It’s a calculated move to reward shareholders while positioning for growth in EVs and infrastructure.

The risks? Sure—steel demand could crater further, or trade wars could escalate. But at this valuation, the reward outweighs the risk. This is a stock to buy now, especially if you believe in the long-term shift to EVs and smart materials. Don’t let this one slip away!

Action Plan:
- Buy now at €36.90, targeting the €39.36 fair value.
- Set a stop-loss at €33 (10% below current price).
- Hold for 1–3 years to capture EV and infrastructure tailwinds.

Bekaert isn’t just a steel company—it’s a materials innovator with a buyback that screams undervaluation. This is your chance to get in before the market catches on. Don’t miss it!