Should you invest in Siemens stock in December?

Should you invest in Siemens stock in December?
Written by:
Michael Harris
14th November, 19:46
Updated: 15th November, 16:47
  • Siemens posted a net profit of 1.9 billion euros in Q4, up 28% compared to a year ago
  • Orders were up 2% compared to the year-ago period, while revenue declined by 3%
  • Siemens share price moved about 6% lower from Monday’s vaccine-fueled highs

Shares of Siemens AG (ETR: SIE) rotated lower in the second part of the last week after the company presented a cautious outlook amid the coronavirus-related uncertainty.  

Fundamental analysis: Profit soars

Siemens posted a net profit of 1.9 billion euros ($2.24 billion) in Q4, 28% higher than in the same period last year, thanks to the spin-off of its energy business Siemens Energy.  

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Still, negative currency translations heavily affected the company’s orders and revenues in the fourth quarter. Joe Keser, Chief Executive of Siemens, said he was very pleased with the profit his company made. 

“We must not forget that the currency impact has been significant in the fourth quarter, mostly due to the U.S. dollar/euro relations, so if you really look at comparable numbers, I believe that being up 2% on orders year-over-year pre-Covid is not that bad of a thing,” said Kaeser.

In the past few months, the euro has solidified against the U.S. dollar, negatively impacting European exporters like Siemens. 

The German conglomerate reported 15.56 billion euros in orders for the quarter, while revenue stood at 15.3 billion euros. Orders were up 2% compared to the year-ago period, while revenue declined by 3%. 

Siemens dealt with the first wave of coronavirus pandemic quite well, said Kaeser. Still, he emphasized that the outlook for the next year was “cautious” as it is still unclear how the company will handle the ongoing resurgence in coronavirus infections. 

On the other hand, drugmakers Pfizer and BioNTech said their coronavirus vaccine was more than 90% in preventing the infections, returning optimism to many sectors. 

There is a light at the end of the tunnel, the question is how long it’s going to take until we are there,” Kaeser added.

“The jury is out obviously, the uncertainty with the pandemic is big.”

Technical analysis: Shares dip

Despite a soaring profit, Siemens share price moved about 6% lower from Monday’s vaccine-fueled highs. Stock price closed over 6 euros lower but still managed to get its head above the 100-DMA at 112.21.

Siemens stock daily chart (TradingView)

However, the price action has created a bearish-looking candle on the weekly chart, which is likely to keep selling pressure in the coming days and weeks. Once coupled with the uncertainty that the company’s CEO expects to witness in the coming period, it looks like the best option is to stay on the sidelines.

Summary

German automation company Siemens reported a net profit of 1.9 billion euros ($2.24 billion) in the fourth quarter, up 28% compared to Q4 2019. Siemens shares closed higher this week but still about 6% lower compared to weekly high.

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