Financials
Financials in One Page
Schneider Electric is a €40B-revenue global leader in low-voltage electrical distribution and industrial automation — a high-quality, mid-cycle industrial whose operating margin has stepped up by roughly 450 basis points in five years (12.3% in 2020 to 16.7% in 2025) on the back of data center and electrification demand, with free cash flow now running above reported net income. The balance sheet absorbed a meaningful step-up in leverage during 2025 (net debt/EBITDA from 0.5x to 1.2x) to fund AVEVA-related and AI-infrastructure acquisitions, but coverage remains comfortable at 14x EBIT/interest. Returns on invested capital have re-rated structurally from a 7-8% baseline (2014-2020) to 11-12% today — Schneider is now earning roughly 4-5 points above its cost of capital, and the market has noticed. At ~€265 per share, the stock trades on roughly 36x 2025 earnings and 19x EV/EBITDA — a clear premium to its own ten-year history (~22x P/E mean), priced in line with US automation peers (ETN, ABB) and at a premium to Siemens. The single financial metric that matters most now is the FY2026 operating margin trajectory — at 16.7% the company is at the top of its own historical band, and any flattening would expose the multiple.
FY2025 Revenue (€M)
Operating Margin
Free Cash Flow (€M)
FCF Margin
ROIC
Net Debt / EBITDA
P/E (Current)
Dividend / Share (€)
A quick glossary the reader should keep in mind: Operating margin is operating income divided by revenue — the cleanest measure of how efficiently the core business converts sales to profit before interest, taxes, and one-offs. Free cash flow (FCF) is operating cash flow minus capital expenditures — the cash left for shareholders, debt paydown, and acquisitions. Return on invested capital (ROIC) is after-tax operating profit divided by debt plus equity — what the business actually earns on the dollars deployed. Net debt / EBITDA is debt net of cash divided by trailing operating earnings before D&A — the standard "how levered is this?" yardstick.
Revenue, Margins, and Earnings Power
The most important fact in Schneider's financials is the profit-margin step-up from 2020 onward. Revenue compounded at a respectable but unspectacular 4.2% over the last ten years and 9.8% over the last five (helped by post-pandemic capex, electrification, and data center build-out). What re-rated the business was operating leverage, mix toward digital/automation/services, and pricing power — not volume alone.
Three points the chart proves. First, gross margin has marched from ~38% to ~42% — about 400bps of pricing/mix gain. Second, operating margin doubled-stepped: 8-13% pre-2021, then 14-17% from 2021 onward — that is the single most important financial event in the company's recent history. Third, operating margin in 2025 (16.7%) ticked down ~20bps from 2024 (16.9%) — small, but the first sign that the easy lift is over.
The most recent two years of half-year data shows the revenue trajectory clearly:
Half-year revenue growth in 2025 ran at +6.4% in 1H and +4.2% in 2H versus the prior-year halves — a deceleration from the +10%+ pace of 2022-2023 and a signal the cycle is normalizing rather than accelerating. Operating profit growth is still outpacing revenue (margin expansion continues), but at a slower marginal rate than in 2023.
Earnings power judgment. Schneider has earned the right to a premium multiple — the margin step-up since 2020 is durable, driven by mix and software (AVEVA, automation), not just price. But the law of large numbers is starting to bite: revenue growth is decelerating toward mid-single digits and margins are at the top of their historical band. The earnings-power debate from here is about defending 17% operating margin, not pushing it to 19%.
Cash Flow and Earnings Quality
The cleanest evidence that Schneider is a real cash compounder, not an accounting story, is that free cash flow has exceeded reported net income in each of the last four years. That is unusual for an industrial — and tells you working capital is being managed rather than gamed, and capex is not eating the P&L.
The 2021 dip is worth understanding: working capital absorbed cash as the supply chain re-stocked post-Covid and revenue jumped 15%. The pattern since then is healthy — FCF is 105-125% of net income, FCF margin is in the 12-14% range, and operating cash flow has grown from €4.3B (2019) to €6.1B (2025).
Three line items that matter for cash quality:
| Cash-flow driver | FY2025 (€M) | What it means |
|---|---|---|
| Capex | -1,072 | 2.7% of revenue — light for an industrial; capacity is being added but the company is not capex-heavy |
| Acquisitions | -1,158 | Material bolt-on activity (Motivair, AveVA-related stakes, data-center adjacencies) |
| Dividends paid | -2,191 | Up from €1.96B in 2024; ~€3.90/share, payout ~53% |
| Buybacks | -341 | Small versus dividends; offsets SBC dilution rather than meaningful capital return |
| Debt issuance | +4,864 | Funding the M&A and refinancing — explains the leverage step-up below |
Net: cash is real, and conversion is high. The only watch item is that 2025 acquisitions absorbed roughly 23% of operating cash flow — a sustained run at that rate is what creates goodwill risk on the balance sheet.
Balance Sheet and Financial Resilience
Schneider runs an investment-grade balance sheet. But 2025 saw a notable change in stance: net debt jumped from €7.9B (FY24) to €13.2B (FY25), and net debt / EBITDA went from 0.5x to 1.2x in a single year.
The shape: cash declined from €6.9B to €4.6B, total debt rose from €14.8B to €17.9B, and shareholders' equity actually fell from €31.3B to €24.5B (likely reflecting AVEVA-related minority-interest and treasury-share movements alongside dividends paid). The result is a much more "normal-industrial" capital structure than the very-low-leverage stance Schneider held during 2017-2024.
Coverage is still robust. EBIT covers interest 14.2x and EBITDA covers it 17.7x — these are investment-grade comfortable. But two things to monitor:
The balance sheet is not stretched, but it is no longer pristine. The bigger structural fact is that half of Schneider's assets are intangible (goodwill and other intangibles) — this is the cost of being a serial acquirer. As long as ROIC stays above WACC (it does), this is fine. If returns slip, those goodwill balances become impairment candidates.
Resilience watch. The 2025 jump in net debt is not yet a problem — coverage is comfortable and the use of funds (M&A in attractive end markets) is defensible. But it is the first year in a decade where the balance sheet narrative changed direction. If FY2026 brings another €3-5B of acquisitions without a meaningful step-up in EBITDA, the leverage story tightens.
Returns, Reinvestment, and Capital Allocation
This is the section that justifies the stock's current multiple.
The pattern is the most important non-margin chart in the deck. ROIC went from a 5-8% band (2015-2020) to an 11%+ band (2023-2025) — a structural re-rating. With WACC for a European industrial typically ~7%, Schneider is now generating roughly 400+ basis points of economic spread, versus zero spread or worse a decade ago.
How is management allocating the cash?
Three honest readings:
1. Dividends dominate; buybacks are token. €2.19B in dividends in 2025 is the largest cash use outside acquisitions; buybacks of €0.34B are barely larger than stock-based compensation issuance (€0.27B). The share count has crept up 1-2% over the past decade — Schneider is not a per-share compounder by buyback the way US automation peers (ETN, ROK) are. This is normal for a French-listed dividend-aristocrat profile, but it limits per-share EPS leverage.
2. Acquisitions are large and lumpy. 2020 (€2.4B), 2021 (€4.2B), 2025 (€1.2B) — Schneider buys revenue and capability rather than building both organically. The strategic logic is sound (software, automation, data center adjacencies), but it loads goodwill and creates integration risk.
3. EPS is real and growing. Diluted EPS compounded at roughly 11.5% per year over ten years and 14% per year over five years (per the trend file). FCF per share has roughly doubled over the decade — that is genuine value creation.
Capital-allocation judgment. Returns went from value-destroying (5-7% ROIC versus 7-8% WACC) in 2015-2020 to genuinely value-creating (11%+ ROIC) from 2023 onward. Management is reinvesting the right amount, paying a meaningful dividend, and using M&A to compound rather than to mask. The honest critique is that buybacks could be larger given the multiple compression risk in a stock trading at 32x.
Segment and Unit Economics
Schneider does not break out fully reconciled segment financials in the consolidated machine-readable filings used here, so the granular segment numbers (Energy Management vs Industrial Automation, geography splits, services mix) are not available in the structured data set. Two facts the business communicates publicly are worth keeping in mind for context:
- Energy Management (~75-80% of revenue) is the larger and higher-margin business: low/medium voltage, power distribution, building automation, data centers.
- Industrial Automation (~20-25% of revenue) houses AVEVA software, motion, and process automation; it is more cyclical and was weaker in 2024-2025 on shorter-cycle automation softness.
The economics of the aggregate company — 17% operating margin on ~€40B of revenue with 11%+ ROIC — are largely driven by the Energy Management franchise. Data center exposure is the single most important top-line driver investors are paying for, with management commentary pointing to roughly 25%+ of revenue tied to data center demand directly or indirectly. The next earnings release is the place to confirm or revise that mix.
Valuation and Market Expectations
This is where the financial judgment becomes the investment judgment.
The current set-up is a clear premium to history. P/E of ~36x (on FY2025 EPS at the current share price of €265) sits roughly 50% above the ten-year mean (~24x) and within touching distance of the 10-year peak. EV/EBITDA at ~19x is similarly stretched. The dividend yield of ~1.5% is at the low end of the historical range, which confirms the rerating is share-price-led, not payout-led.
The bear case on valuation is simple: the multiple already prices the structural margin and ROIC step-up that has already happened. The bull case is that data-center and electrification capex is in the early innings, and a US automation peer set (ETN, ROK) trades at higher multiples on similar growth.
Bear assumes margin pressure plus multiple compression toward the long-run average. Base assumes modest EPS growth and a multiple that holds in the high-20s. Bull assumes data-center demand sustains 8-10% EPS growth and the multiple stretches toward US automation peers. The street-consensus 12-month target of roughly €296-€301 sits between base and bull — that is what the market is paying for today.
Peer Financial Comparison
The peer table tells you Schneider is priced as a top-quality electrical-equipment franchise but not the most expensive one in the space.
The read: Schneider sits squarely in the middle of the electrical-equipment premium set. It is cheaper than ABB, Eaton, and Rockwell on every multiple, and more expensive than Siemens (which trades at a conglomerate discount). On returns it is just behind ABB and Eaton on ROIC but ahead of Siemens, with broadly comparable FCF margin and a more conservative balance sheet than ABB. The simplest read is that Schneider deserves its mid-premium positioning — it is not the highest-quality franchise but it is solidly in the top-quality cohort, and its multiple reflects that. The next derating risk is not relative; it is absolute — the whole electrical-equipment complex is trading at 25-30x P/E, and a sector rotation away from AI/data-center themes would compress all of these multiples together.
What to Watch in the Financials
The financials confirm three things: that the franchise is genuinely higher quality than it was five years ago, that cash conversion is real, and that capital allocation has shifted from defensive to growth-oriented. They contradict the narrative that Schneider is "just" a beneficiary of the AI capex cycle — the structural margin and ROIC step-up began before the data center surge in 2023-2024, which suggests the business model has improved permanently.
The first financial metric to watch is the FY2026 H1 adjusted EBITA margin — if it stays above 18.5% (the post-2023 floor) the premium multiple is defendable; if it slips below 18% on softer Industrial Automation volumes, the stock's 30x+ multiple becomes the most expensive thing about owning it.