Schneider Electric: Ethical Energy?, Stock Trading Strategy

A global leader in its sector, Schneider Electric has a unique portfolio of digital and energy solutions that meet the needs of customers in terms of sustainability and business efficiency. The activities of the multinational corporation are focused on two main areas (energy management and industrial automation) with four end markets: construction, data centers (Data center), infrastructure and industry.

Schneider Electric has sustainability goals and is committed to supporting its customers in sustainability. The company’s ESG score is above the industry average, and in 2021 it was ranked among the 100 Most Ethical Companies for the tenth year in a row. The company has developed a sustainable development program (Schneider Sustainability Impact / SSI), the goal of which is to become carbon neutral with compensation by 2025. This would mean 800 million tons of CO emissions.2 spared. The goal for 2050 is zero net CO2 emissions.2 throughout the supply chain.

The company intends to continue its progress in the field of 100% recycled cardboard packaging, it also wants to ensure that the steel contained in its products comes from responsible sources and production chains, and to educate more people in the field of energy management.

The company’s financial statements for the first quarter of 2022 were published on April 27. Schneider Electric presented strong results and even confirmed its targets for the full year. Profit exceeded expectations by 4.1% of investors who were on hold due to Covid-19 and raw material shortages. The impact of various lockdowns (especially in China between March and May 2022) should be felt in corporate results in the second quarter.

Turnover in the first three months of the financial year amounted to 7.57 billion euros, representing an increase of 9.8%. Schneider Electric benefited from positive exchange rate effects, in particular through the strengthening of the US dollar and the Chinese yuan against the euro (North America accounted for 30% of sales at the end of March, and Asia-Pacific 31%). The positive change in exchange rates contributed to sales growth of 258 million euros, equivalent to 4% of revenue.

As of February 24, Schneider Electric has suspended all new investments and all international deliveries of new orders for projects in Russia and Belarus. On April 27, the group announced its intention to sell the activities of Schneider Electric Russia to local management. It remains only to obtain the approval of the authorities of the country. Russia accounts for 2% of Schneider Electric’s accounts and potential impairment of up to EUR 300 million of net book value.

Despite Covid-19 challenges and raw material shortages, Schneider Electric continues to experience strong and dynamic demand, with sales benefiting from a stronger order book than in 2021. Crisis-related uncertainty remains, but management remains confident that China will be the growth driver for the group this year.

Schneider Electric is a company with a very good foundation: very good diversification and distribution of activities, it is truly a leader in the industry and also a participant in the transition to sustainability. The group overcame the challenges recently reported in the news and exceeded market expectations.

Schneider Electric: ethical energy?

Schneider Electric: ethical energy?
Schneider Electric: ethical energy?

Schneider Electric shares have just corrected 50% of the post-COVID up move, we are now in the ‘overlap’ zone at 129 euros (former resistance zone turned support), support at 123 euros seems to be strong.

We can foresee a continuation of the bounce with a target of 140 euros, or a 9% yield, by setting a stop at 123.5 euros, or 4.5% below the current price. This trade offers us a good risk/reward ratio of 2.

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