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Despite macroeconomic uncertainties, the building energy renovation market continues to benefit from strong growth. This good situation is linked to the rise in energy prices and incentive public policies, all against a backdrop of inevitable climate transition. Thermador is one of those companies which, without being completely immune to economic upheavals, has a positioning well adapted to the situation.
This medium-sized French group, based in Isère, distributes fluid management equipment to individuals, but especially to professionals. Thermador has a very large number of suppliers around the world, approximately 800, which allow it to fill its catalog of equipment. The products are then sold to wholesalers, generalists or specialists, market places, merchant sites or DIY superstores.
Consistent and solid performance
Before discussing strategy and figures, it is necessary to underline a singular aspect of the file. Very early on, Thermador adopted a transparent and extremely educational communication policy with its shareholders and more broadly with the financial community. An effort that is all the more remarkable in that it is rather rare in France, especially among companies of this size. This is one of the two reasons which explain the excellent reputation enjoyed by the management, both among individuals who follow the stock and among portfolio managers specializing in mid-caps. The other justification relates to the regularity and solidity of financial performance.
Thermador generated 554 million euros in sales in 2022. Building fluid circuits account for half of sales, in particular heating and sanitary water equipment. At the same time, the group generates 23% of its turnover in industrial fluids, 17% in domestic pumps and 9% in large tools, in particular compressors. With the acquisition of DPI at the end of 2022, a department dedicated to plastic pipes has strengthened the scope. The French branch generates 83% of revenues. International development, measured, is an obvious growth driver for the company, which has mainly targeted the industrial valve market in Europe.
A value of “good father”
This activity, all in all quite diversified, shows a remarkably constant profitability. Over the last ten years, the operating margin has fluctuated between 13% during the weakest years and 15% for the best vintages. Management is conservative, with a historically low level of debt, which only increased slightly last year with the DPI transaction. Thermador pays out a steadily increasing dividend, but in line with its financial capacities. The valuation is moderate, with an earnings multiple that stands at less than 13 times the expected results this year and beyond. This fairly low level reflects the disaffection from which average values on the stock market have suffered in recent years, in Europe as in the United States. Over the past ten years, Thermador’s average PER has fluctuated around 19.
Despite the current disenchantment of the markets for anything that does not look like a technological colossus, the quality is there. The private investor is clearly faced with a value stamped “good father”, with a significant connotation on the energy transition since a large part of the offer relates to the optimization of fluid networks. The main downside is economic. The rise in key rates has cast a chill over the building market. Thermador suffers from this, but the management likes to point out that the company covers primary needs: protection from hot and cold or washing when it comes to water networks, food and treatment when it is necessary to equip food factories or laboratories.