Schneider Electric SE (SBGSF, Financial) (SBGSY, Financial) is arguably the best energy company in the world. This French company, founded in the early 1800s, is soup to nuts in energy and electricity. Goldman Sachs (GS, Financial) is very bullish on Schneider.
The stock trades for 67.80 euros ($75.94), there are 591.7 million shares and the market cap is 40.1 billion euros ($44.9 billion). Earnings per share were 3.12 euros last year and the price-earnings ratio is 21.7. The dividend is 2.04 euros and the dividend yield is 3%. It takes $1.12 to buy one euro.
Sales have been a little choppy over the past several years. They were 24.7 billion euros last year and 26.14 billion euros the year before that. The company was able to cut costs and earnings increased. Free cash flow was 2.11 billion euros and the free cash flow yield is 5.3%. That is a decent free cash flow yield.
The balance sheet is strong. The asset side shows 2.8 billion euros in cash and 7.4 billion euros in receivables. The liability side shows 4.1 billion euros in payables and 7.5 billion euros in debt.
Of its revenues, 27% are from Western Europe, 27% from Asia, 28% from North America and 18% from the rest of the world. Talk about global. Forty-three percent of its business is focused on buildings, 22% on industrial applications, 20% on infrastructure and 15% on information technology. For some reason, the French are strong in electricity. Do not ask me why. They get 80% of their power from nuclear and you know it takes some know-how to run that.
So what does Schneider do exactly? It is a tech-electric company. Schneider will go into a building and put in systems for temperature control, data centers, energy storage, fire safety and surge protection, making sure everything is hooked up to the “internet of things” and hundreds of other applications. If you want to have an electric car recharging facility, you go to Schneider. And all of this is linked to your smartphone.
If you go into an electrical supply store, you will see Schneider’s cables, electrical boxes, wireless remote controls, sensors, switches, gauges and on and on. An example of the company’s software is a program to save energy on HVAC pump applications. The company’s Wiseair system has a thermostat that communicates with your cell phone.
So back to the electrical car charging station. Schneider manufacturers all of the wire, cables, routers, plug-ins, sensors and close to everything else at the station. The company sends out the engineers to oversee the job of building and maintaining and has the software to run everything. Schneider even has an Energy University for folks wanting to study energy.
I have written about Schneider before but was reminded about it when reading last weekend’s Barron’s Midyear Roundtable. Abby Joseph Cohen of Goldman Sachs noted their analyst has an earnings target of 4.24 euros in 2017 and 4.88 euros in 2018. If that happens, the stock goes up.
The beauty of Schneider is that it is a tech company but probably will not be superseded by another tech company. It is not like someone can come out with a better phone and knock Schneider off its perch. Having said that, the company is based on the economy. Strong economy, strong Schneider. Weak economy, weak Schneider. Like many of the stocks I write about, Schneider does not get a lot of attention in the U.S. but is arguably the best at what it does.
Disclosure: We do not own shares.
