Schneider Electric: 16.9% organic growth, a $22.6 billion acquisition and 25 million new shares, so hold at €237.50

Schneider Electric reported organic revenue growth of 16.9% for the third quarter eleven days after its shares fell 9.97% in one session on the announcement of a $22.6 billion acquisition of PTC. Four days after the results it sold 25 million new shares at €240. At €237.50 the shares are priced as a data center electrification business that will also run industrial software well, and the second half of that sentence is not in the numbers yet.

At €237.50 on October 30, 2026, Schneider trades 3.0% above my weighted Base of €230.58. The Bear value of €147.31 is 38.0% below the price and the Bull value of €313.85 is 32.1% above it. I assign no probabilities to the cases. A required margin of safety of 42.5% gives a buy range of €122.32 to €142.85 and a conservative limit of €122.32. The verdict is Hold, and no new money at this price.

Valuation route: a capital-goods group with software and services, valued on five-year earnings power with the PTC purchase counted at what it is worth to Schneider, and cross-checked by enterprise value to adjusted EBITA on 2027 pro forma profit. Values are present fair-value estimates, not 12-month price targets.

What Schneider Electric is

Schneider has two segments. Energy Management (€9.6 billion of third-quarter revenue) sells electrical distribution, power equipment and services, and it is where the data center demand lands. Industrial Automation (€1.8 billion) sells machine and process control and software. By business model, systems are 35% of revenue, products 48% and software and services 17%. North America was 40% of the third quarter.

PTC, announced on October 5, adds engineering and product lifecycle software. Management expects completion by the third quarter of 2027, subject to PTC shareholders and regulators.

The latest results

Reported growth was 17.9% in the quarter and 12.5% over nine months, because currency took 2.2 points from the nine-month figure. The backlog is a record, but the company gave no amount. For the first half, adjusted EBITA was €4.1 billion, up 22% organically, a margin of 19.3%, up 120 basis points. Net income was €2.5 billion and free cash flow €1.6 billion, both well above last year.

Management raised its 2026 targets in October to organic revenue growth of 12% to 14% and an organic improvement in the adjusted EBITA margin of 100 to 120 basis points. I use the margin implied by that, about 19.8%, and revenue of about €45.2 billion for 2026 after currency of -€300 million to -€400 million.

What the cash flow is made of

• Growth is mostly volume. Management said product growth was predominantly driven by volumes, with the price contribution increasing from the second quarter. So the 15% is not price.
• Profit is converting. First-half net income of €2.5 billion was 61% of adjusted EBITA. In 2025 reported net income was €4.2 billion on revenue of €40.2 billion. I use 58% of adjusted EBITA as net income in the model.
• Free cash flow is rising from a low base. €1.6 billion in the first half is up 244%, which shows how weak the comparison period was. I did not find a full-year free cash flow figure.
• Software is the slowest part. Software and services grew 7% in the quarter against 22% for systems, and PTC is a software purchase.

Debt, shares and financing

The funding is a bridge loan from two banks that is being replaced by the share sale and bonds. The shares were sold at 4.99% below the October 19 close of €252.60, and they closed below the sale price on October 22 and 23 and above it again from October 27. Net debt differs between sources: one reports €16.3 billion for June 30 and 1.78 times, another €15.4 billion and 1.64 times. I use €15.4 billion and say so in the stress test section.

Primary valuation: five-year earnings value

Schneider on its own: I project revenue and the adjusted EBITA margin to 2031, convert to net income at 58%, apply an exit multiple to 2031 net income, and add dividends at an assumed 45% payout, all discounted at 9%. Then I add PTC at what I think it is worth, subtract the €16 billion of new debt, and divide by 588.5 million shares. The Base value is €212.73.

• Revenue: €45.2 billion in 2026, then growth of 9%, 7%, 6%, 5% and 5%. That fades from 15% today toward the pace of electrification demand once the data center build-out matures.
• Margin: 19.8% rising to 22.0% by 2031, a gain of about 45 basis points a year, less than the 100 to 120 this year.
• Exit multiple: 22 times 2031 net income. Schneider's one-year average forward multiple was 25.8 times and its low, in March 2026, was 22.9 times, so 22 times assumes growth has slowed to 5%.
• PTC: worth 90% of the €21.1 billion enterprise value Schneider pays, or €19.0 billion. Management expects returns above the cost of capital only from year five, and one outside estimate puts the return on the purchase price near 8%, below a cost of capital near 9%. The Bear uses 70% and the Bull 110%.
• Terminal share: the 2031 exit value is 91% of Schneider's standalone value, and the standalone value is the large part of the total. I show the sensitivity below.

Primary value per share by 2031 margin (rows) and exit multiple (columns), holding PTC at 90%:

The price of €237.50 sits between the 24 and 26 times columns at the Base margin. Each additional point of 2031 margin is worth about €9 a share, and two turns of multiple about €17.

Secondary valuation: enterprise value to adjusted EBITA

I take 2027 pro forma adjusted EBITA of about €11.1 billion (Schneider on its own plus €1.0 billion from PTC, which is its 2027 EBITA before synergies at the price paid), apply 16 times, subtract pro forma net debt of €31.4 billion and divide by 588.5 million shares. That gives €248.43. 16 times is my judgment, close to 22 times earnings after interest. The Bear uses 13 times on lower profit and the Bull 19 times.

Growth diagnostic

Growth is high and mostly volume. It is structural in electrification and data centers and cyclical in the capital spending of customers who build them, and the company gives triple-digit growth for data centers only qualitatively. I classify the growth as strong but concentrated in one end market. The share count rose 4.3% in October to pay for an acquisition, so per-share growth for the next two years will trail profit growth.

Valuation triangulation

• Primary (five-year earnings value): €212.73, weight 50%.
• Secondary (EV to adjusted EBITA): €248.43, weight 50%.
• Divergence: 15% of the midpoint, below the 20% warning level.
• Weighted Base: €230.58.

The methods agree within 15%. The earnings method is lower because it fades growth to 5% and charges a 9% cost of capital, while the multiple method pays 16 times for 2027 profit that is still growing at double digits.

What is the market already pricing in?

On the earnings method alone the price needs a 2031 multiple near 25 times with growth still at 5%, or PTC to be worth about 1.6 times what Schneider pays for it. The cross-check method reaches the price with a multiple only slightly above my 16 times, and neither route leaves any margin.

Bear, base and bull scenarios

• Bear: revenue growth of 4%, then 3%, a flat 19.5% margin as data center orders slow, an exit multiple of 17 times, PTC worth 70% of its price, and 13 times 2027 profit in the cross-check.
• Base: as described above.
• Bull: growth of 12% in 2027 fading to 6%, a margin reaching 24%, an exit multiple of 26 times, PTC worth 110% of its price, and 19 times in the cross-check.

The discount rate is 9% in all cases. The spread is wide because the electrification cycle can run longer or end earlier, and because PTC will take until 2030 to show whether it earns its cost of capital.

How the buy price is set

Confidence is C, which has a default margin of safety of 42.5%. I add nothing for method disagreement, because the divergence is under 20%.

The entry range is €122.32 to €142.85 and the conservative limit is €122.32. The price is 66% above the top of the range. The range states what I can defend as a margin of safety, not an expectation that the shares will fall there.

Dividend and buybacks

Schneider pays an annual dividend; I did not confirm the amount per share and I model it as 45% of net income. The 2026 buyback of €600 million is on track (€497 million done by October 12) and is then suspended for 2027 and 2028 to protect the rating. The 2026 to 2030 target of €2.5 billion to €3.5 billion is kept, which implies buybacks resume in 2029.

Reasons to own Schneider Electric

• Organic growth of 15% over nine months with a margin rising by more than 100 basis points a year is rare for a group of this size.
• The backlog is at a record and data center demand grew at triple-digit rates in the quarter.
• Both rating agencies confirmed A-category ratings after the PTC announcement.
• Software and services are 17% of revenue and are expected to rise with PTC, which should add recurring revenue.
• Pricing is starting to contribute, so margin gains are not only operating leverage.

What could go wrong?

• End-market concentration. Data center demand drives the growth and the capital spending of a small number of customers can change quickly.
• PTC. The purchase price is 21 times 2027 EBITA before synergies, 8 times 2026 revenue and 26 times targeted free cash flow, and the buyer needs year five to beat its cost of capital.
• Leverage. Net debt roughly doubles to about 3 times adjusted EBITDA, with a rating at stake.
• Dilution. 25 million new shares, 4.3% of capital, were sold at €240 and buybacks stop for two years.
• Industrial Automation. Process automation and hybrid markets declined in China, and the segment grew only 8.1%.
• Execution. The company is integrating Cognite and preparing for PTC while the core business grows at 15%.

Management execution

• The company raised targets twice in 2026 and delivered record revenue in the second and third quarters.
• The acquisition was announced on October 5, before the quarterly release, and the share sale followed within two weeks, which secured the funding but cost the shares about 10% on the day.
• Management kept the 2026 buyback and paused it for 2027 and 2028, which is a clear statement of priorities.
• Guidance for PTC is low single-digit adjusted earnings accretion in year one, before purchase accounting, and mid-to-high single digit with full synergies.

Stock Analyza scorecard

The valuation score is 29 of 100.

Business quality and valuation are shown separately and are not averaged. A great growth business at a full price is a Hold.

Confidence score

The grade measures how well the model is identified, not the chance of a loss. The data center cycle and the value of PTC are the reasons it is a C.

What I would watch from here

The three most important thesis breakers

1. Data center capital spending slows before the margin gain is locked in.
2. PTC earns less than its cost of capital past year five.
3. Leverage and the buyback pause cost the company its A rating.

Stress test and independent check

I recomputed every value, the sensitivity grid and the reverse valuation with a separate script. That checks the arithmetic, not the forecasts.

The weakest point is that I did not read the company's own release or statements and relied on summaries, and that the dividend per share and full-year free cash flow are missing. The strongest bull argument is that the electrification cycle lasts longer than a five-year fade and PTC adds high-margin software, which together are worth about €314 a share. The strongest bear argument is that data center growth reverses and the company is left with a higher share count and double the debt, which is worth about €147.

Final verdict: hold at €237.50, do not add

Schneider is turning a data center electrification business into an industrial software company, and shareholders pay for the change twice: once with 25 million new shares and again through a two-year buyback pause.

Verdict: HOLD at €237.50, do not add. Weighted Base €230.58, 2.9% below the price, cross-check €248.43, Confidence C (17/25). Required margin of safety 42.5%, buy range €122.32 to €142.85, conservative buy limit €122.32.

For an existing holder, the original cost is irrelevant. The business is strong and the price is about fair, so I would not sell on valuation alone and I would not add. New money waits for a price at or below €142.85. The next tests are the full-year results in February and the PTC shareholder vote.

Sources

Primary sources are Schneider Electric's third quarter 2026 revenue release as summarized by Idéal Investisseur, the half-year results as summarized by tED magazine, the PTC deal coverage by TIKR and L'Essentiel de l'Eco, and the share sale terms from ABC Bourse. Historical financials are from StockAnalysis.

The reference market price is €237.50, the October 30, 2026 Euronext Paris close, from ABC Bourse. I did not read the company's own release or accounts.