MTX GR

MTU Aero Engines AG

Industrial/Transportation


Presented:05/12/2023
Price:€228.80
Cap:$13.70B
Current Price:€303.90
Cap:$18.20B

Presented

Date05/12/2023
Price€228.80
Market Cap$13.70B
Ent Value$13.39B
P/E Ratio36.89x
Book Value€56.85
Div Yield1.4%
Shares O/S53.76M
Ave Daily Vol144,392
Short IntN/A

Current

Price€303.90
Market Cap$18.20B
MTU Aero Engines AG is engaged in the development, manufacture and trade of aviation engine and components. It operates its business through the following segments: Original Equipment Manufacturing, and Maintenance, Repair and Overhaul. The Original Equipment Manufacturing segment develops, manufactures, assembles and delivers commercial and military engines and components. The Maintenance, Repair and Overhaul segment maintains, repairs and overhauls aircraft engines and industrial gas turbines. The company was founded by Karl Rapp in 1913 and is headquartered in Munich, Germany.

Publicly traded companies mentioned herein: Airbus SE (AIR FP), Embraer SA (ERJ), MTU Aero Engines AG (MTX GR)

Highlights

The presenter is long shares of MTU Aero Engines AG (MTX GR), a Munich-based manufacturer of aircraft engines and engine parts. The stock, which is primary listed in Germany, suffered for much of 2022, falling from ~€220 to ~€150 on fears of a European recession and the energy crisis brought on by the war in Ukraine. It has since recovered to €229 per share but remains below pre-COVID levels and trades at just over 11x consensus 2023 EBITDA, representing a discount to the S&P 500 average valuation. Looking forward, the presenter assumes EBITDA compounds at a mid- to high-teen% rate for a few years (vs. the Street’s LDD% EBITDA growth), driven by strong growth in its spare parts business and secular tailwinds (industry recovery post-COVID, shift to narrow body aircrafts, pricing growth). Underwriting a seemingly conservative 12.5x EBITDA multiple, he reaches a €330+ price target over the next couple years.

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