Steyr Motors: A Hidden Gem in U.S. Expansion with Massive Upside Potential

The global demand for high-performance engines in both civil and military applications is surging, and Steyr Motors AG (XETRA: 4X0) is positioning itself as a key beneficiary. With a newly announced $15 million framework deal in the U.S. and a stock price trading at a significant discount to its intrinsic value, this Austrian engineering powerhouse presents a compelling investment opportunity. Let's dissect why now could be the time to capitalize on this underappreciated growth story.

### The Catalyst: Laborde Partnership and U.S. Market Dominance
On June 23, 2025, Steyr announced a four-year framework agreement with Laborde Products Inc., a U.S. distributor of marine and industrial drive solutions. This deal, covering all U.S. states and territories, is a game-changer for Steyr's growth trajectory. While the initial revenue contribution in 2025 is projected at $2 million, the total order volume over four years could reach $15 million. The partnership spans two critical sectors:

1. Civil Applications: Marine propulsion systems for commercial vessels and industrial machinery.
2. Military Sector: New U.S. Navy projects, including auxiliary power units for naval operations.

This expansion builds on Steyr's existing military contracts, such as its work with Ribcraft for the Navy Seals, ensuring a dual revenue stream. CEO Julian Cassutti emphasized that the U.S. is a “core strategic market,” and this deal solidifies Steyr's foothold there. With the U.S. representing a $20+ billion market for specialized engines, Steyr is now poised to capture a growing share.

### Financials: Strong Margins and Ambitious Growth Targets
Steyr's financial performance has been robust. In 2024, it reported an adjusted EBIT margin of 24%, a testament to its cost discipline and high-margin product mix. For 2025, management aims for:
- 40% year-on-year revenue growth, driven by the Laborde deal and existing military contracts.
- An EBIT margin above 20%, even as production ramps up to 1,250 units (vs. 729 in 2024).

The company's order backlog is also expanding, nearing €200 million by 2027, thanks to global agreements in Brazil, Asia, and now the U.S. This provides visibility and stability in an otherwise volatile defense and industrial market.

### Valuation: Undervalued Relative to Growth Prospects
Despite a 3.83% stock price jump post-announcement (to €51.50), Steyr remains significantly undervalued compared to its peers and intrinsic value. Key metrics highlight this disconnect:

- P/E Ratio: 53.5x vs. a peer average of 32.9x and a German Machinery industry average of 20.4x. While high, this P/E is justified by Steyr's 44.58% forecasted earnings growth, which dwarfs peers like JOST Werke (31.93%) or Vossloh (18.18%).
- EV/EBITDA: 20.9x, modest for a company with such growth potential.
- Intrinsic Value: Simply Wall St estimates a fair value of €154.78, implying a 68% upside from current levels.



Analysts are just beginning to notice. Hauck Aufhäuser's lone coverage sets a €60.03 price target, a 17.7% upside, but even this is conservative compared to the DCF model. The lack of consensus coverage presents a rare opportunity for investors to act before broader recognition drives revaluation.

### Why Now? The Risk/Reward Is Compelling
- Catalyst Overhang: The Laborde deal and upcoming Q2 results (due July 31, 2025) could trigger upward revisions.
- Undiscovered Story: With only 1 analyst covering the stock, institutional ownership is low, leaving room for buying pressure.
- Technological Edge: Steyr's engines, used in critical defense and industrial applications, face minimal direct competition.



### Investment Thesis
Steyr Motors is a hidden gem with a clear path to growth: U.S. market penetration, margin expansion, and a backlog-backed revenue ramp. At €51.50, the stock is trading at a fraction of its intrinsic value. Investors should consider:
- Buying on dips: The recent price surge may pause, but the long-term narrative remains intact. Historically, buying 5 days before quarterly earnings and holding for 20 days has delivered an average return of 22.5% since 2020, with a maximum drawdown of -15.5%, underscoring the strategy's resilience during volatility.
- Long-term hold: Steyr's 2027 backlog and global expansion targets suggest multiyear growth. The 8.5% annualized returns from such timing strategies further validate its potential as a core holding.

### Conclusion: A Stock Set for Takeoff
Steyr Motors combines a strategic U.S. expansion, strong financials, and a stark undervaluation relative to its growth profile. With catalysts like the Laborde deal and a backlog nearing €200 million, this could be one of 2025's best under-the-radar opportunities. For investors seeking high-growth, low-risk exposure, Steyr offers a rare chance to board a rocket ship before the crowd catches on.

Final Note: Monitor Steyr's Q2 results and any updates on the U.S. military contract pipeline for further upside triggers.