Electrical Equipment & Automation: Beta, Multiples & WACC by Sector

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What the numbers say.

The electrical equipment sector has shifted noticeably this month. It is valued notably lower than a month ago: the median P/E fell to 20.0x and most companies became cheaper, the beta rose to 0.93, and the cost of capital stands at 9.0 %. Margins, not growth, separate the expensive companies from the cheap ones. The sector is more unsettled than in September: the choice of peers and settings moves the value more than it did.

P/E is the multiple to use

It is the tightest of the multiples the fundamentals explain, a dispersion of 24 % across the 20 companies, and the companies are comparable in ROE. EV/Sales spreads by 49 % because it carries the margin differences with it.

The beta to use: 5 years, monthly, 0.93

Among the stable settings it has the tightest spread across the 20 companies; R² 23 %, 19 of 20 betas significant, less liquid group (median bid-ask spread 0.31 %). It is the smartZebra standard setting. The settings alone move the median beta from 0.85 to 1.22.

The settings matter

Ten of the twenty companies move the P/E median by −22 % to +11 %, the settings by up to 42 %. Electrical equipment sits in the settings corner of the map.

EBIT margin is confirmed

The usual yardsticks for electrical equipment: EBIT margin and expected growth. EBIT margin: confirmed (rank correlation +0.72 with EV/EBIT (NTM)). Expected growth: partly (rank correlation +0.45 with P/E (NTM)).

P/E (NTM): median 22.2x → 20.0x

1 more expensive · 17 cheaper

SMA Solar Technology fell most (−24 %), Kardex rose most (+14 %).

{"m":[["Belimo","36.5","34.2","−6%"],["ABB","36.7","34.0","−7%"],["Kardex","24.7","28.1","+14%"],["Smiths Group","26.2","24.9","−5%"],["Suhner","26.4","23.8","−10%"],["Pfeiffer Vacuum Technology","24.5","22.1","−10%"],["Legrand","22.8","20.7","−9%"],["Siemens","21.6","20.6","−5%"],["Siemens Energy","23.2","20.2","−13%"],["Schneider Electric","25.8","19.8","−23%"],["Prysmian","21.6","18.3","−15%"],["Cenergy","18.8","16.9","−10%"],["Nordex","16.4","14.7","−10%"],["TKH Group","15.6","14.3","−8%"],["Nexans","16.5","14.1","−15%"],["SMA Solar Technology","16.3","12.3","−24%"],["Rexel","12.5","11.3","−10%"],["Signify","9.1","8.5","−6%"]],"b":[["Siemens Energy","1.69","1.74",63],["Kardex","1.45","1.40",77],["Schneider Electric","1.22","1.27",88],["Nordex","1.18","1.18",47],["Siemens","1.13","1.16",95],["Belimo","1.16","1.14",69],["ABB","1.07","1.12",93],["Legrand","1.01","1.03",81],["Suhner","1.00","0.98",60],["Smiths Group","0.91","0.94",84],["SMA Solar Technology","0.93","0.92",43],["TKH Group","0.88","0.90",71],["Prysmian","0.83","0.86",64],["Cenergy","0.85","0.85",42],["Vestas Wind Systems","0.84","0.83",62],["Nexans","0.81","0.82",52],["Rexel","0.73","0.74",76],["NKT","0.67","0.66",63],["Signify","0.65","0.66",55],["Pfeiffer Vacuum Technology","0.65","0.60",52]],"w":["Cenergy","SMA Solar Technology","Nordex","Nexans","Pfeiffer Vacuum Technology"]}

Beta (5 years, monthly): median 0.92 → 0.93

19 of 20 significant

Each line runs from last month’s beta (light dot) to this month’s (blue dot), on the same beta setting.

Do the usual yardsticks hold this month?

The usual yardsticks for electrical equipment, tested on the 20 companies this month.

Each extra point of EBIT margin adds about 0.5x to EV/EBIT.

EBIT margin

Confirmed

Rank correlation +0.72 with EV/EBIT (NTM) · clear link from +0.60

Expected growth

Partly

Rank correlation +0.45 with P/E (NTM) · clear link from +0.60

Position on the sector map

This sector in gold, the other 19 sectors in blue. Dashed lines at 40 pp are illustrative.

Construction

Chemicals

Utilities

158

Telecom

Media

Travel & Leisure

Retail

Luxury

Consumer Goods

Logistics

Business Serv.

Aero & Defence

Electrical Eq.

Medtech

Pharma

IT Services

Semiconductors

Software

Automotive

Machinery

Electrical Eq.

How much the choices move the result

Beta and fit

R² (median)

23 %

Significant betas

19 of 20

Median bid-ask spread

0.31 %

Beta range across settings

0.85–1.22

What moves the value?

Change vs. prior month

−10 % vs. September

Peer impact on the median

−22 % to +11 %

Spread from peer choice (pp)

Spread from beta settings (pp)

Position on the sector map

Settings decide

Cost of capital

Cost of equity (CAPM)

“kE = rf + β · MRP”

rf = base rate, MRP = market risk premium, β = sector median beta.

WACC

“WACC = E/(D+E) · kE + D/(D+E) · kD · (1 − t)”

kD = base rate + credit spread; t = peer-average tax rate.

Tax rate

“t = average tax rate of the 20 peers”

Shown above as Tax rate (%).

Selection rules

Best-fit multiple

“lowest dispersion across the 20 companies”

The reference multiple is used only as a fallback.

Beta setting

“tightest spread among stable settings”

Replaces 5y monthly only if it passes the two-month rule.

Status

“|Δ value| ≤ 1 % and |Δ β| ≤ 0.03 → stable”

Up to ±5 % / ±0.06 → shifted a bit; beyond → shifted noticeably.

Scope

The 20 largest European listed companies by market value with core business in electrical equipment, automation, cables and grid technology; primary listing on a European exchange; banks, insurers, financial services and real estate are excluded.