Shares of the German industrial conglomerate Siemens Aktiengesellschaft (SI), reached a new 52-week high of $133.57 on Nov 27. Its share prices have been on an uptrend after the company announced a favorable fiscal 2014 outlook. The closing price of the industrial goods manufacturer on Nov 27 was $133.22, representing a solid 1-year return of 29.3% and year-to-date return of roughly 20.0%.
The company reported mixed fiscal fourth-quarter 2013 results on Nov 7, 2013, with an earnings miss and a beat on the revenue front, with respect to the Zacks Consensus Estimate. However, its positive outlook for recovery of its short-cycle businesses in the latter half of fiscal 2014 and a guidance of at least 15% rise in earnings for fiscal 2014 were key drivers.
Also, the “Siemens 2014” -- a cost cutting program by the company is expected to reap benefits in 2014. The “Siemens 2014” restructuring program, launched in fiscal 2013, targets sustainable value creation. This program targets sustainable value creation and aims to raise net profit from its sectors by at least 12% during fiscal 2014. The “Siemens 2014” program is expected to augment long-term growth.
Estimates have been rising for this company after it released a positive outlook for fiscal 2014. The Zacks Consensus Estimates of earnings for 2014 was revisedupwards by 3.8% to $9.23 per share.
Moreover, investors’ sentiment got a boost on share buyback announcement during the company earnings release. The company plans to repurchase stock worth $5.4 billion (4 billion euros) in the next two years.
Also, the company is in advanced talks with a private equity player AEA Investors, to divest its water technologies business for roughly $800 million. This divestment is expected to solidify Siemens liquidity position.
Moreover, Siemens’ global leadership in most of its key businesses; including industrial automation, power generation, medical equipment and transportation; is encouraging.
Other Stocks to Consider
Siemens presently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry worth reckoning include Garmin Ltd. (GRMN), Control4 Corp. (CTRL) and Mistras Group, Inc. (MG), each carrying a Zacks Rank #2 (Buy).