Knorr-Bremse AG Misses Earnings, But Analysts Remain Optimistic

Knorr-Bremse AG, the global leader in braking systems and a key supplier of rail and commercial vehicle systems, recently released its full-year results for 2024. While the company's revenues met expectations, its earnings per share (EPS) fell short of analyst forecasts, causing a slight dip in investor sentiment. However, the updated analyst models suggest a mixed outlook for the company's future, with modest revenue growth and significant earnings growth expected in 2025.

The company's revenues for 2024 came in at €8.0 billion, in line with analyst forecasts. However, statutory EPS came in 12% below expectations, at €2.77 per share. This discrepancy can be attributed to several factors, including challenging market conditions, particularly in the truck division, and the strong performance of the Rail Division, which helped to offset some of the challenges faced by the truck division.

Despite the earnings miss, analysts remain optimistic about Knorr-Bremse's future prospects. The latest consensus forecast from twelve analysts predicts revenues of €8.27 billion for 2025, reflecting a 3.4% improvement compared to the previous year. This projection is slightly lower than the pre-report estimates of €8.33 billion, suggesting a minor downward adjustment in revenue expectations. However, statutory EPS is predicted to surge by 52% to €4.20, which is slightly below the pre-report EPS estimate of €4.26. This indicates that while revenue growth may be modest, earnings growth is expected to be robust.

The consensus price target for Knorr-Bremse AG remains largely unchanged at €81.80, indicating that analysts have not significantly altered their overall valuation of the company despite the latest results. The range of price targets, from €60.00 to €100.00, suggests a reasonable level of agreement among analysts, although there is still some variability in their expectations.

In terms of industry comparison, Knorr-Bremse's expected revenue growth of 3.4% for 2025 is lower than the historical growth rate of 5.4% over the past five years and also lower than the industry average of 4.7% annually. This implies that Knorr-Bremse is expected to grow at a slower pace compared to its peers, which could be a concern for investors looking for higher growth potential.



Despite the earnings miss, Knorr-Bremse's strong financial health and strategic initiatives suggest that the company is well-positioned to navigate the current challenging market environment and leverage growth opportunities. The company's BOOST 2026 measures, which focus on revenues, cost discipline, and cash flow, continued to prove valid and effective. The operating EBIT margin increased sharply to 12.3% from 11.3% the previous year, and operating EBIT rose to €966 million from €893 million the previous year. This indicates that the company's strategic initiatives are having a positive impact on its financial performance.

Knorr-Bremse achieved an operating free cash flow of €730 million, a new record high in the company’s history. The cash conversion rate soared to 113% from 96% the previous year, which is even above the target range. This strong financial performance suggests that the company is in a good position to navigate the current challenging market environment and leverage growth opportunities.

In summary, while Knorr-Bremse AG's recent earnings results were mixed, the updated analyst models suggest a mixed outlook for the company's future prospects. While revenue growth may be modest, earnings growth is expected to be robust. Investors should consider these factors when evaluating the company's future prospects.