Automation And One Supplier Projects Will Drive Long Term Value For This Business

Catalysts

About Kardex Holding

Kardex Holding provides automated storage and warehouse systems through its Automated Products and Standardized Systems segments.

What are the underlying business or industry changes driving this perspective?

• Growing use of warehouse automation for reshoring and labor scarcity is supporting demand for intralogistics projects. This can support Kardex bookings and net revenue as customers look for end to end solutions from a single supplier.
• The One Kardex approach, where multiple business units jointly win projects, is already linked to around €150 million of bookings. Greater cross selling across Remstar, Mlog, AS Solutions and Rocket can support order intake, backlog and future earnings.
• A strong order backlog at the start of 2026 and book to bill above 1 in 2025 provide visibility on future project execution. This can feed through into higher reported net revenues and operating profit as projects are delivered.
• Higher exposure to systems solutions such as AutoStore and Rocket multi shuttle, where customers often sign larger and longer projects, can expand Kardex’s addressable market for light goods and pallet handling. This can support revenue growth and margin resilience over time.
• Ongoing investment in sales, marketing, R&D and a unified ERP platform is intended to increase commercial reach and operational efficiency. This can support gross margin stability and EBIT margin within the stated 10% to 14% group target range.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Kardex Holding's revenue will grow by 11.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.9% today to 9.2% in 3 years time.
• Analysts expect earnings to reach €109.9 million (and earnings per share of €17.99) by about March 2029, up from €41.6 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 30.9x on those 2029 earnings, down from 52.8x today. This future PE is greater than the current PE for the GB Machinery industry at 23.8x.
• Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.07%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The systems business depends on converting a very strong order intake and a larger backlog into completed projects. Any sustained execution bottlenecks or delays in realizing projects with 9 to 18 month durations could slow net revenue recognition and keep EBIT growth below expectations, putting pressure on earnings.
• Kardex is increasing investment in sales, marketing, R&D, IT and higher security stocks at the same time that systems margins are at the lower end of the group target corridor. If revenue growth does not keep pace with these elevated OpEx and CapEx levels, EBIT margin and free cash flow could remain under strain for longer than investors expect, weighing on earnings.
• The acquisition of Rocket Solutions is intended to broaden the portfolio. The initial impact included a full write off of a €39 million loan and a higher tax rate under IFRS treatment, and if the integration, technology adoption or future option to acquire the remaining 13% do not translate into profitable growth, this could dilute returns on invested capital and equity, limiting earnings growth.
• Growth is heavily tied to long term trends such as automation, reshoring and labor scarcity, but the business still faces geopolitical tensions, tariffs and regional demand swings. Any prolonged weakness in key regions like the U.S. or APAC or further tariff related costs could affect bookings, compress gross margins and slow net revenue and EBIT progress.
• The plan to reach €1.5b in net revenue between 2029 and 2031 involves a larger systems mix, higher regional diversification and continued investment. If competition intensifies or customers prefer multi vendor solutions rather than One Kardex, pricing power and project win rates could soften, which would impact revenue growth, EBIT margin and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of CHF342.56 for Kardex Holding based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CHF375.0, and the most bearish reporting a price target of just CHF285.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be €1.2 billion, earnings will come to €109.9 million, and it would be trading on a PE ratio of 30.9x, assuming you use a discount rate of 5.1%.
  
• Given the current share price of CHF257.5, the analyst price target of CHF342.56 is 24.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.