Nordex SE (ETR:NDX1): A Windfall of Value in Turbulent Markets

Nordex SE (ETR:NDX1), a leading manufacturer of wind turbines and provider of energy solutions, has emerged as a compelling value opportunity in 2025. Recent financial results, robust order intake, and a discounted cash flow (DCF) valuation suggest the stock is significantly undervalued compared to its intrinsic worth. Here's why investors should take notice.

1. Strong Financial Turnaround and Operational Momentum

Nordex has undergone a remarkable transformation in recent years. After years of volatility, the company reported a €271 million free cash flow (FCF) in 2024, a staggering 1,255% improvement from €20 million in 2023. This surge was driven by:
- A 12.5% revenue increase to €7.3 billion in 2024.
- A record order backlog of €13.5 billion as of Q1 2025, up 21% year-on-year, fueled by demand in Türkiye, Germany, and Latin America.
- The Service segment's revenue growing 19% to €197 million in Q1 2025, with an expanding backlog of €5.2 billion.

The company's Q1 2025 results further reinforced its turnaround:
- EBITDA jumped 53% year-on-year to €79.6 million, with margins improving to 5.5%.
- Net profit turned positive at €8 million, reversing a loss of €13 million in Q1 2024.
- Free cash flow turned positive at €4 million, a stark contrast to negative €254 million in the same period last year.

2. DCF Valuation: A 41% Upside Potential

A DCF analysis reveals Nordex is trading far below its intrinsic value. Key inputs and results include:

DCF Input	Assumption
Discount Rate (WACC)	10.5% (weighted average cost of capital, reflecting Nordex's equity and debt costs).
Terminal Growth Rate	3% (long-term global GDP growth, adjusted for wind energy's declining growth rate).
Free Cash Flow (2025)	€97.4 million, rising to €367.1 million by 2034 (122% initial growth, tapering to 1.9% by 2034).

The results:
- Base Case Fair Value: €24.11 per share.
- Upside Case (9.5% discount rate): €26.34 per share.
- Downside Case (11.5% discount rate): €19.48 per share.

At the June 19, 2025, closing price of €16.62, Nordex trades at a 27–41% discount to its DCF-derived fair value. Even under conservative assumptions, the stock offers substantial upside.

3. Catalysts Driving Value Realization

Several factors could narrow the valuation gap:
1. Order Backlog Execution: With €13.5 billion of projects secured, Nordex is well-positioned to convert this into revenue, especially in high-growth markets like Türkiye and Brazil.
2. Margin Expansion: The company aims to reach an 8% EBITDA margin by 2026 (up from 4.1% in 2024). Recent efficiency gains in production and supply chain management support this target.
3. Geopolitical Diversification: Nordex's global manufacturing footprint (Spain, Brazil, India, and Mexico) mitigates risks from regional trade barriers, such as U.S. tariffs.

4. Risks to Consider

• Supply Chain Volatility: Delays in rotor blade production or turbine component sourcing could pressure margins.
• Policy Uncertainty: Subsidy reductions or regulatory shifts in key markets (e.g., Germany's renewable energy policies) could impact demand.
• Commodity Prices: Steel and copper costs, critical to turbine production, remain volatile.

5. Investment Recommendation

BUY with a 12–18 Month Horizon
- Price Target: €24.72 (aligning with the base case DCF) implies a 48% upside from current levels.
- Risk Management: Investors should set a stop-loss at €15.00 (a 10% downside from the June 19 close).

Nordex's improving fundamentals, robust order pipeline, and compelling DCF valuation make it an attractive play on the global renewable energy boom. While risks exist, the stock's margin of safety and growth prospects justify a long position for investors with a medium-term outlook.

Final Note: Nordex's journey from cash-strapped player to a financially disciplined leader underscores its potential. With a clear path to profit and valuation multiples far below its fair value, this could be one of the wind industry's strongest returns.