Wärtsilä Oyj Abp (HLSE:WRT1V) Targets AI Data Centers, Is The Stock Still Cheap?
Wärtsilä Oyj Abp (HLSE:WRT1V) has partnered with Schneider Electric and Stanley Consultants on a “Generator to Chip” concept aimed at accelerating power deployment for AI-heavy data centers in the United States.
The Generator to Chip partnership lands at a moment when Wärtsilä Oyj Abp’s €29.35 share price has seen a mixed stretch, with a 4.26% 1 day share price return and a 3.67% 30 day share price return, yet a 90 day share price decline of 10.16% and year to date share price return down 5.57%. Over a longer horizon, the picture looks very different. A 1 year total shareholder return of 21.49% and a 5 year total shareholder return of 219.24% point to momentum that has been building over time rather than fading in recent years.
Scan how Wärtsilä Oyj Abp’s data center push compares with other power and infrastructure plays by zeroing in on the hand picked 39 power grid technology and infrastructure stocks today.
After Wärtsilä Oyj Abp’s strong multi year shareholder gains and its recent pullback, the question now is whether the current €29.35 price still leaves meaningful upside or already reflects most of the story.
Most Popular Narrative: 9% Undervalued
Against Wärtsilä Oyj Abp’s last close of €29.35, the most followed narrative points to a fair value of about €32.33. This frames the current pullback as a discount rather than a premium to expectations.
The analysts have a consensus price target of €32.33 for Wärtsilä Oyj Abp based on their expectations of its future earnings growth, profit margins and other risk factors. In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be €8.4 billion, earnings will come to €871.9 million, and it would be trading on a PE ratio of 27.2x, assuming you use a discount rate of 7.3%.
See why 20 investors see Wärtsilä Oyj Abp as 9% undervalued.
Result: Fair Value of €32.33 (UNDERVALUED)
Still, that 50/50 energy storage joint venture and any slower shift away from traditional engine technologies could upset the current Wärtsilä Oyj Abp valuation story.
Find out about the key risks to this Wärtsilä Oyj Abp narrative.
Another View On Wärtsilä Oyj Abp’s Valuation
Analyst fair value work and the community narrative point to Wärtsilä Oyj Abp at around 9% below their estimate, yet the market is not giving it away on simple P/E terms. At about 26.2x earnings, the stock trades well above European Machinery peers at 20.4x.
The fair ratio for Wärtsilä sits closer to 27.8x, which implies the market already prices the business much nearer to what regression based models suggest it could drift toward over time. For investors, the question is whether paying a premium to the sector for only a small gap to that fair ratio feels comfortable.
See what the numbers say about this price in our valuation breakdown by checking the See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
If the mixed tone of this Wärtsilä Oyj Abp story leaves you undecided, act promptly: review the key drivers, then weigh the 3 key rewards.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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