Alstom's Leadership Transition Signals Sustainable Growth in Rail Dominance

The rail industry is undergoing a transformation, driven by decarbonization mandates, urbanization, and the digitization of infrastructure. At the center of this shift stands Alstom, Europe’s rail champion, now navigating a pivotal leadership transition while maintaining its position as a global leader. With a €95 billion order backlog, 18% EBIT margin growth, and a seamless succession plan, Alstom is poised to capitalize on its strengths—but its stock remains undervalued. Here’s why investors should act now.

Leadership Stability: A Blueprint for Continuity

Alstom’s announcement that CEO Henri Poupart-Lafarge will step down in 2027 signals confidence in its post-Bombardier integration and financial resilience. The Board’s deliberate transition process, avoiding external hires and prioritizing internal candidates, underscores a focus on operational continuity.

Alstom’s stock has lagged peers despite outperforming in margins and backlog growth. This mispricing creates an entry point.

Poupart-Lafarge’s tenure has delivered results: he oversaw the integration of Bombardier Transportation (completed in 2021), expanded the services portfolio (now 25% of revenue), and grew the EBIT margin to 14.5% in 2024. His successor will inherit a strong foundation, but the Board’s emphasis on an internal search ensures leadership aligned with Alstom’s vision of “smart and sustainable mobility.”

New Regional Leaders: Strengthening Key Markets

The appointments of Andrew DeLeone and Martin Vaujour reflect a strategic rebalancing of Alstom’s regional priorities.

Europe: Andrew DeLeone’s Proven Track Record

DeLeone, now President of Europe, brings decisive commercial expertise. His prior role as AMECA region head saw Alstom secure contracts worth €1.2 billion in 2023, including Saudi Arabia’s high-speed rail project. His move to Europe positions him to leverage his experience at Bombardier (pre-merger) and GE, where he mastered complex project execution.

Europe remains Alstom’s largest market, accounting for 45% of revenue. DeLeone’s focus will likely center on sustainability-driven contracts, such as Germany’s €5 billion S-Bahn upgrade, where Alstom’s Coradia trains are already in use.

AMECA: Martin Vaujour’s Global Experience

Vaujour, now AMECA’s president, brings cross-border acumen. His decade in Russia and role in Transmashholding’s expansion into Latin America and the Middle East positions him to capitalize on emerging markets. His stint managing post-Bombardier integration remedies also highlights his ability to navigate regulatory challenges—a critical skill in regions with fragmented rail markets.

Strategic Catalysts: Services, Digitalization, and Margin Expansion

Alstom’s near-term drivers are clear:

1. Services Growth: The €95 billion backlog includes long-term service contracts (e.g., UK’s Thameslink maintenance), which provide recurring revenue and visibility. Services margins are already 10% higher than equipment sales.
2. Digitalization: Alstom’s Briovis predictive maintenance platform and Metraker traffic management software are reducing downtime for clients. These software-as-a-service models could add 200-300 bps to margins by 2026.
3. Large Contracts Execution: Germany’s S-Bahn project (€5B) and Saudi’s Haramain High-Speed Rail (€3.6B) are on track, with deliveries through 2028.

Alstom’s backlog has grown at a 9% CAGR since 2020, outpacing Siemens’ 6% growth.

Valuation: A Mispriced Leader in a Consolidating Industry

Alstom trades at 10.5x 2024E EV/EBITDA, significantly below Siemens Mobility (12.8x) and Bombardier (14.3x). This discount ignores its superior execution:
- Margin Expansion: Alstom’s 14.5% EBIT margin vs. Siemens’ 10.2%.
- Sustainability Leadership: 40% of new orders are for green products (e.g., hydrogen trains).

The CEO transition’s completion in 2027 will likely trigger a re-rating. Until then, investors gain exposure to a low-risk, high-margin play in a fragmented industry ripe for consolidation.

Conclusion: Buy Before the Transition Completes

Alstom’s leadership reshuffle is not a risk but a catalyst. The internal succession plan, coupled with DeLeone and Vaujour’s expertise, ensures continuity in Europe and growth in AMECA. With $1.8 billion in cash, a fortress balance sheet, and underappreciated digital initiatives, Alstom is primed to outperform.

The stock’s current valuation leaves little room for downside. For investors seeking resilient, ESG-aligned growth, Alstom is a rare opportunity to buy a rail leader at a discount—before the transition’s final chapter unfolds.

Margin growth has outpaced peers, signaling operational excellence.

Action: Initiate a position in Alstom (ALSO.PA) now. The CEO transition’s conclusion in 2027 will likely unlock value, but the near-term catalysts—services growth, contract deliveries, and margin upside—make this a buy at current levels.