Siemens Energy Accelerates €3 Billion Buyback, But Valuation Hangover Weighs on Shares

Siemens Energy ramps up share buybacks to €3B for FY2026, fueled by booming orders and record free cash flow, but stock slides 2.38% amid valuation concerns.

Siemens Energy is pumping cash back into shareholders at a record pace, yet the market is still hitting the sell button. The Munich-based industrial group bought back €2 billion worth of its own shares in just 77 trading days, nearly doubling the pace originally planned, and has now flagged a bigger repurchase target for the current fiscal year. But the stock’s trajectory tells a different story: it slumped another 2.38 percent on Thursday to €170.88, extending a pullback that highlights a growing tension between operational strength and a lofty price tag.

Between March 4 and May 19, the company snapped up 12.6 million shares at an average price of €158.50 apiece through Xetra and other European trading platforms. That first tranche was completed well ahead of schedule — the original deadline ran to August — leaving management free to accelerate plans. For fiscal 2026, Siemens Energy now intends to allocate up to €3 billion to buybacks, up from the previously planned €2 billion. The overall €6 billion programme announced in November remains unchanged; the acceleration is simply funded by the torrent of cash flowing from operations.

The source of that cash is clear. Free cash flow before taxes jumped 42 percent in the second quarter to nearly €2 billion, lifted by stronger earnings and chunky customer prepayments. Combined with the dividend already distributed, Siemens Energy expects to return a total of €3.6 billion to shareholders in the current financial year, and around €10 billion by 2028 — with €6 billion of that coming from buybacks. The repurchased shares will either be used for employee programmes or cancelled, which would mechanically boost earnings per share.

Behind the cash generation stands a booming order book. Second-quarter order intake hit €17.7 billion, pushing the book-to-bill ratio to 1.72. The total backlog swelled to €154 billion, giving management unusual visibility into future revenues: around 93 percent of the second half of fiscal 2026 and close to 80 percent of fiscal 2027 are already covered by existing contracts. Grid Technologies, the division riding the energy-transition wave, was a standout. Its full-year revenue growth forecast was lifted to 25–27 percent from a previous 19–21 percent, and orders from data centres alone contributed nearly €2 billion in the first half. The US market was particularly strong, with second-quarter orders reaching €6.94 billion — more than double the year-ago level — and American revenues climbing 45.7 percent to €2.75 billion.

The operational picture has prompted a full-year guidance upgrade. Management now expects comparable revenue growth of 14 to 16 percent, an earnings margin before special items of 10 to 12 percent, net profit of around €4 billion, and free cash flow before taxes of roughly €8 billion. Half-year revenue came in at €19.97 billion, net income at €1.44 billion, and earnings per share from ongoing operations more than doubled.

But none of that was enough to hold the shares at their recent peak. After a blistering run that left the stock up nearly 99 percent over twelve months and 39 percent year-to-date, the narrative has shifted from growth story to valuation debate. The shares closed Thursday at €170.88, 9.11 percent below the 52-week high of €188. The relative strength index of 56.7 suggests no extreme overheating, but annualised 30-day volatility remains elevated at 48.27 percent. More striking is the price tag: the forward price-to-earnings ratio stands at 67.4, compared with a peer-group average of 38.4 and a European electrical-equipment sector average of 29.5. After a near-doubling in twelve months, the market is pricing in perfection.

A recent disclosure that Amundi has built a 3.04 percent voting stake — 3.08 percent including other instruments — did little to shift sentiment. The filing is routine and carries no strategic weight.

The real test comes on August 5, when Siemens Energy reports third-quarter numbers. Investors will be watching closely whether the record backlog translates into fatter margins and firmer cash flows, and whether Siemens Gamesa, the troubled wind unit, can sustain its return to profit. Until then, the buyback acceleration may signal management’s confidence, but it is the valuation that will dictate the stock’s next move.