Nordex, the most expensive wind turbine manufacturer.

(CercleFinance.com) - Up 27% since the start of 2014 at 12.
2 euros, the share of the German wind turbine manufacturer Nordex has outperformed the TecDAX index (+5.8%), which it belongs to. However, trading at 30x earnings, the share price seems to integrate most of the good news.

Major industrial groups, such as Siemens, General Electric, Mitsubishi Heavy Industries, Alstom and Areva also manufacture wind turbines. On average, these shares are trading at 2014 P/Es of around 15x. In Europe, there are also listed “pure players,” such as the Danish wind turbines giant Vestas, the Spanish group Gamesa, or even the German Nordex. On average these stocks are trading at 2014 P/Es of close to 27x.

These high valuations are justified by the sector's recovery and very strong earnings growth expected; both in 2014 (+932 % for Vestas, and around 250 % for Gamesa and Nordex) and 2015 (between +120% to +150%).

To date, the Nordex share is trading at the highest 2014 P/E of the three stocks (over 30x).

In 2013, when its sales soared 33% to 1.4 billion euros, Nordex estimated that its market share in the Europe, Middle East and Africa region doubled to 11%. At 1.5 billion euros, new orders were up 18.5%.

In 2014, sales are expected to increase by about 5% to 1.5 billion euros, while its operating margin should increase from 3% to 4%, according to group management.

Indeed, Nordex benefits from sound visibility. However, the modest growth ahead, coupled with fairly low margins suggest investors should be cautious at the share's current price.

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