Inspired by the Global Wind Report of the Global Wind Energy Council (GWEC), we are now researching the valuation and financial situation of companies being active in this high growth segment. We have initiated our clean-tech company modeling with Nordex AG: Valuation is more or less in line with expectations. Click here for the actual stock quote.

Profile
Nordex AG is a manufacturer of wind turbines, with plants in Rostock, Germany, Yinchuan and Dongying, PR China and soon in Jonesboro, Arkansa, USA.
The company was founded in Denmark in 1985, listed in 2001 and is a TechDax member.
The Nordex wind turbines can be found all over the world and contribute to the creation of renewable energy.

Short term
Nordex AG has commented its fiscal year 2009 guidance. Assuming that sales volumes as a whole remain flat across the entire industry, Nordex AG still anticipates an increase in its own sales to approximately EUR 1.2 billion for the fiscal year 2009, although profitability is likely to be weaker than in the previous fiscal year 2008. As a result of higher business volume, the Company’s Management Board expects higher earnings in the second half of fiscal year 2009, compared with the first half of fiscal year 2009. The working capital ratio is expected to decline to around 15% thanks to reduced inventories by the end of the year 2009.

Longer term
A +15% long term CAGR might proof to be a floor instead of a ceiling for Nordex. The disappointing growth of the year 2009 is being seen as an accident: the US and now China will boost market growth (double digit) up to 2020-2030. Nordex AG has structurally outperformed market growth in the past.


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about Equitycatwalk

the author has no position in this stock at the moment of publishing

We don’t think the stockmarket has gotten ahead of itself.

This year the ex-ante or forward looking equity-riskpremium of the S&P 500 decreased  from it's high of 8% (feb 2009)  to about 6% (beginning of May 2009) to a rounded 5% (4.93%) right now.

In historic perspective going back until 1994, only in september 2002 at the low of the .com crash, the MRP reached a former high of 5%.

So, the current MRP equals the MRP at the high of the market stress level of the .com crash. 

After the .com crash, the MRP declined from 5% in september 2002 to 3% in february 2004 and for example 3.5% in november 2002. This last rapid decline can't be the result of a rapid adjustment in earnings, just because the time frame of only 2 months is too short.

The information I received from a broker using factset. For further info about the development of the MRP, please use factset.

What I would like to point out is the following:

• MRP can increase and decrease very rapidly (manic): movement of capital is far faster than movements of the real economy
• The 8% level is (was) very high in historic perspective
• The decrease to 6% is a 150bp decrease in about 4 months time vs 2 months time after the .com crash
• Still, the current MRP, is at peak-stress 2002 levels
• Although a lot of investors suggest the market is overvalued, the MRP suggests that a high level of stress is still being discounted
• So, we don’t think the market has gotten ahead of itself – august 2009

The first signs of a stabilizing MRP are that market direction is more and more influenced by company results and estimates and less by ‘the psychology of fear and greet’.
It is not unusual for stock's dcf valuation to have a 30% sensitivity regarding a 100bp change in the MRP.