Key Morningstar Metrics for Vestas Wind Systems
- Fair Value Estimate: DKK 145
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Vestas Wind Systems’ Earnings
Vestas reported third-quarter adjusted operating profit of EUR 416 million, up 77% year over year and ahead of the company-compiled consensus of EUR 305 million. Management narrowed its full-year EBIT margin guidance to 5%–6% from 4%–7% and announced a EUR 150 million share buyback.
Why it matters: The strong performance was driven by the power solutions division, where onshore wind benefited from higher turbine deliveries, stable pricing, and lower warranties, more than offsetting its manufacturing ramp-up costs.
- The services business maintained adjusted EBIT margin of around 17% as the recovery plan progresses. Management now expects full-year adjusted EBIT of EUR 625 million, down from EUR 700 million, reflecting higher costs associated with offshore wind sites in the fourth quarter.
- Offshore weakness persists, with no new order intake for the second consecutive quarter. The EUR 9.9 billion order backlog should support earnings through 2026, but the lack of new orders could extend the segment’s dilutive impact on power solutions margins.
The bottom line: We raise our fair value estimate for no-moat Vestas to DKK 145/EUR 19.30 per share from DKK 135/EUR 18, reflecting narrowed EBIT margin guidance, the announced share buyback, and the time value of money. Following the 12% post-results rally, the shares now trade in 3-star territory, in line with our updated fair value estimate.
- We lift our full-year adjusted operating margin forecast to 5.0% from 4.6%, expecting continued onshore wind momentum to support margins. But we lean toward the lower end of the new guidance range, as we remain cautious on the dilutive impact of offshore wind and factor in lowered expectations for services profitability.
Key stats: The resolution of policy uncertainties in the US and supportive demand in Germany drove onshore order intake to 4.6 gigawatts in the quarter, up 63% from 2.8 GW of onshore orders and 3.9% from total orders of 4.4 GW in the same period last year.
