Key Morningstar Metrics for Vestas Wind Systems
- Fair Value Estimate: DKK 135
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Vestas Wind Systems Earnings
Vestas VWS reported second-quarter adjusted operating profit of EUR 57 million, 36% below the company-compiled consensus of EUR 89 million, as offshore ramp-up costs led to a power solutions’ adjusted EBIT margin of negative 0.4%. Management reaffirmed its targets for the full year.
Why it matters: The positive momentum in onshore wind deliveries and an 18% decrease in warranty costs were offset by expenses and increasing depreciation related to the rollout of the V236-15.0 MW offshore wind platform, resulting in an EUR 11 million operating loss for the power solution division.
- Vestas recorded no offshore turbine orders in the quarter. While the firm holds a backlog of EUR 10.6 billion, future weakness in offshore orders could extend the segment’s negative contribution to the power solutions business, which is now targeted to break even after 2026.
- Recovery in the services segment is progressing, with EBIT margins stable at around 17.2%, though still below Vestas’ historical average. With first-half adjusted EBIT of EUR 329 million, the company remains on track to achieve its target of around EUR 700 million by 2025.
The bottom line: We maintain our DKK 135 fair value estimate and no-moat rating for Vestas. Despite a 15% rally year to date, the shares still trade at a 16% discount to our valuation, weighed down by uncertainty over the wind energy outlook.
- We expect offshore wind ramp-up costs to continue pressuring power solutions’ margins in the near term. However, with the seasonally weaker first half behind us and service margins stabilizing, Vestas should still deliver on its 4% to 7% full-year adjusted EBIT margin target, likely toward the lower end.
- Our fair value estimate assumes 2025 revenue of EUR 19.1 billion, consistent with market expectations and the midpoint of the company’s EUR 18 billion to EUR 20 billion guidance range.
