Siemens Energy's €146 Billion Order Backlog Meets a Critical Profitability Test

Siemens Energy stock is up 190% in a year. The upcoming Q2 report hinges on whether its troubled wind unit, Siemens Gamesa, can meet its critical break-even target for 2026.

Siemens Energy shares, trading near €168, have delivered a staggering 190% gain over the past year. This remarkable rally now faces a decisive moment as the company prepares to report second-quarter earnings on May 12. The central question for investors is whether the firm's deeply troubled wind unit can finally deliver on its promised turnaround.

The industrial giant's core operations are firing on all cylinders. First-quarter results for fiscal 2026 revealed a near-tripling of net profit to €746 million. New orders surged by 34% to €17.6 billion, pushing the total order backlog to a record €146 billion. A significant driver is demand from AI data centers, which now accounts for a quarter of new orders in the gas turbine business. This momentum has propelled the stock up more than 37% since the start of the calendar year.

Yet, this strength is counterbalanced by the persistent weakness at subsidiary Siemens Gamesa. The wind power unit remains unprofitable, though it has made progress. Its operational loss narrowed dramatically to €46 million last quarter from €374 million a year earlier, following an annual loss of €1.36 billion in 2025. Management has set a firm target for Gamesa to reach break-even for the full 2026 fiscal year. The first half is still expected to be in the red, making a sharp recovery in the second half absolutely critical.

This binary outlook has created an unusually wide split among analysts. JPMorgan maintains an 'Overweight' rating with a €200 price target, while Barclays, despite raising its target from €90 to €100, remains at 'Equal-Weight'. The current share price already exceeds the consensus target, indicating the market has raced ahead of most expert forecasts. The valuation reflects high expectations, with a trailing P/E ratio above 60 and a forward P/E for 2026 around 32.

To support the share price, Siemens Energy has initiated a substantial buyback program. The first tranche, worth up to €2 billion, is scheduled to run until September 2026, with a long-term framework allowing for up to €6 billion in repurchases by 2028. For the full year, the company forecasts revenue growth of 11-13%, a profit margin of 9-11%, and a net profit between €3 and €4 billion.

Other risks appear more contained. Potential US import tariffs are estimated to be in the low triple-digit millions of euros, a manageable sum for a company operating 28 production sites stateside. Meanwhile, the ongoing Hannover Messe, running until April 24, highlights industry themes like AI solutions for the energy sector and power infrastructure for data centers, which align perfectly with Siemens Energy's core growth areas.

The upcoming report will be scrutinized for any sign that Gamesa's recovery is on schedule. Success would likely sustain the upward trend, while disappointment could trigger a significant pullback, with key technical support levels seen between €155 and €159. FactSet analysts project an annual dividend of €1.70 per share, more than double the previous year's €0.70 payout, but even that forecast hinges on the wind division's performance in the coming months.