Getlink's Diverging Traffic Trends: Truck Weakness vs. Passenger Resilience and Strategic Pivots

The cross-Channel infrastructure sector is witnessing a striking divergence in traffic trends at Getlink SE (EPA:GET), the operator of the Channel Tunnel. While truck volumes have contracted in 2025 due to economic headwinds and competitive pressures, passenger traffic has defied expectations, growing steadily. This divergence raises critical questions about the company's strategic adaptability, long-term value, and whether its stock price reflects these dynamics.

Passenger Resilience Offsets Truck Weakness

Getlink's H1 2025 data reveals a 2% decline in truck traffic (591,746 units) compared to 2024, driven by subdued freight demand in Great Britain and intensified competition from rail and road alternatives. Meanwhile, passenger vehicle traffic via LeShuttle surged 2% year-over-year to 985,847 units, with July 2025 seeing a 4% monthly increase. This resilience is underpinned by robust tourism demand, particularly in the UK, and the competitive pricing of Getlink's services.

The divergence is not merely cyclical but structural. Truck traffic has declined for two consecutive months (May and June 2025), while passenger demand has grown for four months straight. Eurostar's high-speed rail service, which transported 5.6 million passengers in H1 2025 (a 4% increase), further underscores the shift toward passenger-centric growth. Getlink's ability to leverage this trend—through yield management, service quality improvements, and strategic partnerships—will be pivotal in offsetting freight declines.

Sustainability and Diversification: Strategic Anchors

Getlink's long-term value proposition hinges on its sustainability initiatives and diversification into energy interconnects. The company has strengthened its ESG credentials, earning a CDP A rating and an MSCI AAA rating. These upgrades align with global investor priorities and position Getlink to attract ESG-focused capital.

The Eleclink segment, a 2,000 MW electricity interconnector between France and the UK, has faced challenges in 2025 due to normalized energy markets and operational suspensions. However, 92% of its 2025 capacity is already sold, generating €205 million in expected revenue. While Eleclink's EBITDA fell 56% year-to-date, its long-term potential remains intact, especially as cross-Channel energy demand stabilizes.

Meanwhile, the Europorte rail freight segment has maintained stable revenue and a 2% EBITDA increase, supported by strategic acquisitions like Electrofer SAS, a rail processing specialist. This expansion into logistics services diversifies Getlink's revenue streams and mitigates reliance on volatile freight markets.

Valuation: Overpriced or Undervalued?

Getlink's stock valuation appears at odds with its fundamentals. As of July 2025, the company trades at a P/E ratio of 27.3x, significantly above the Industrials sector average of 12.3x and peer averages. Its EV/EBITDA multiple of 17.1x also suggests a premium, despite EBITDA margins of 51.6% in 2025. Analysts project a 11.37% upside, with a consensus price target of €18.16, but a discounted cash flow (DCF) model implies the stock is overvalued by 104.9% relative to intrinsic value.

The valuation disconnect stems from two factors:
1. High leverage: A Debt/EBITDA ratio of 4.1x raises concerns about financial flexibility, though free cash flow margins of 23.69% provide some cushion.
2. Eleclink volatility: While the segment's contribution has declined, its long-term revenue visibility (€205 million secured for 2025) is factored into EBITDA guidance of €780–830 million.

Investment Thesis: Balancing Risks and Opportunities

Getlink's strategic pivot toward passenger services and sustainability positions it to capitalize on long-term trends in cross-Channel travel and energy interconnects. However, the stock's premium valuation requires careful scrutiny. Key risks include:
- Freight market volatility: Truck traffic declines could persist if UK economic conditions worsen.
- Eleclink normalization: Energy market normalization may cap Eleclink's future margins.
- Debt management: High leverage could constrain growth investments.

For investors, the decision hinges on whether Getlink's structural advantages—its dominant position in cross-Channel infrastructure, ESG leadership, and diversification into energy—justify the current premium. While the stock is overvalued by DCF metrics, its strong EBITDA margins, resilient passenger growth, and strategic initiatives (e.g., EES implementation) offer a compelling long-term case.

Conclusion: A Cautious Buy

Getlink's diverging traffic trends highlight its ability to adapt to shifting demand patterns. The company's passenger-centric growth and sustainability efforts provide a solid foundation for long-term value creation. However, the stock's elevated valuation necessitates a cautious approach. Investors with a medium-term horizon may find opportunities in dips, particularly if freight recovery outpaces expectations or Eleclink's performance stabilizes. For now, a “Cautious Buy” rating is warranted, with close monitoring of Q3 2025 results and EBITDA guidance updates.