Siemens Energy’s Record Backlog and Buyback Momentum Face a Gamesa Profitability Test

Siemens Energy shares double as orders hit record €17.7B and cash flow guidance rises to €8B, but wind unit Gamesa must break even to sustain targets.

Siemens Energy’s shares have more than doubled over the past twelve months, propelled by a surge in orders and a dramatically strengthened balance sheet that has allowed the company to resume dividends and retire more than 12 million of its own shares since March. Yet the glow from the electrification boom masks a persistent liability: its wind turbine subsidiary Siemens Gamesa, which must break even by the end of the fiscal year for the group’s upgraded targets to hold.

The order pipeline has never been fatter. Comparable order intake jumped nearly 30% to a record €17.7 billion in the latest quarter, while the order backlog swelled to €154 billion — a buffer that underpins revenue visibility well into the next decade. Grid Technologies remains the standout division, with operating margins heading toward 18–20%, and Gas Services raised its growth forecast after benefiting from record demand. The United States was a particular bright spot, with order intake more than doubling year-on-year.

That momentum is translating into cash with surprising speed. Management has doubled its free cash flow before taxes guidance to roughly €8 billion for the full year 2026, having already booked nearly €2 billion in the first half. Net income for the period came in at €1.443 billion on revenue of about €20 billion, setting the stage for a projected full-year net profit of around €4 billion. The improved cash generation is partly driven by hefty customer advances and higher profitability, enabling the company to cancel 12 million shares since March — a clear signal of its newfound confidence in capital allocation.

After a multi-year hiatus, Siemens Energy also reinstated a dividend of €0.70 per share for the prior fiscal year. With net earnings trending toward €4 billion, analysts see room for a sustainable payout policy, especially as management plans to elaborate on its capital strategy at investor conferences in Boston, New York and Zurich over the coming weeks.

But the entire outlook is conditional on one division’s turnaround. Gamesa’s quarterly loss narrowed sharply to €44 million from €249 million a year earlier, and its margin improved from minus 9.2% to minus 1.7%. The offshore wind business is now expected to deliver the decisive swing into the black during the second half of the financial year. If it fails, the group’s adjusted guidance — including revenue growth of 14–16%, an operating margin of 10–12% and that €8 billion free cash flow target — would come under serious strain.

Analysts have taken notice. Jefferies lifted its price target to €215 from €164, keeping a “Buy” rating, as analyst Lucas Ferhani noted that order intake and gas turbine performance again exceeded expectations. JPMorgan followed with an “Overweight” rating and a target of €225. The consensus from 25 analyst ratings stands at €169, with 19 recommending a buy.

Activist investor Ananym Capital has meanwhile renewed its call for a spin-off of Gamesa, arguing that the wind unit’s losses are depressing the valuation of the thriving core business. Whether that demand gains traction depends entirely on how convincing the Gamesa turnaround proves to be.

The stock currently trades at around €175, some 43% higher year-to-date and roughly 8% below its April record of €188. The next major checkpoint comes on August 5, when Siemens Energy releases its third-quarter figures — a report that will either validate the bullish thesis or reignite doubts about the wind division’s trajectory.