Sandvik's Q3 Results Show No Signs of an Economic Slowdown; Shares Fairly Valued

Narrow-moat Sandvik’s impressive third-quarter results, which saw organic order intake grow 8%, will help alleviate investors' concerns (at least for the time being) about the general health of the global economy and its expected negative impact on the short-cycle nature of Sandvik’s business. The easing of supply chain challenges helped contribute to 13% organic revenue growth, which was further boosted by acquisitions and favorable currency movements resulting in 35% growth in reported revenue. Adjusted operating profits grew 30%, a slower pace than revenue, due to price increases on new orders not fully reflected this quarter and margin dilution from acquisitions. We maintain our SEK 193 fair value estimate and view shares as fairly valued.