Knorr-Bremse Aktiengesellschaft (KBX.DE) | Investment Case

1. Company Snapshot

1.a. Company Description

Knorr-Bremse Aktiengesellschaft develops, produces, markets, and services braking and other systems for rail and commercial vehicles worldwide.The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems.It offers braking, entrance and HVAC systems; power electrics and control technology; digital solutions for optimization of rail traffic, couplers; signal systems; stationary and mobile testing equipment; wiper and wash systems; and sanitary systems for mass transit and long distance rail vehicles.

The company also provides braking systems comprising brake control systems, disk brakes, drum brakes, brake cylinders, valves and pedal units; steering systems and vehicle dynamics solutions; driver assistance systems; automated driving and electronic leveling control; energy supply and distribution systems, including compressors and air treatment products; and engine components and transmission control systems for trucks, buses, trailers, and agricultural machinery.In addition, it offers leasing, holding, logistics, and media and IT services.The company was founded in 1905 and is headquartered in Munich, Germany.

Knorr-Bremse Aktiengesellschaft is a subsidiary of KB Holding GmbH.

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1.b. Last Insights on KBX

Knorr-Bremse's recent performance was driven by a double-digit share price rise, with investors potentially undervaluing the company by 30%. The company's decision to increase its periodic dividend to €1.75, a 10% increase, is a positive development, indicating a commitment to returning value to shareholders. Additionally, the stock is estimated to be trading below its intrinsic value, offering an opportunity for investors to capitalize on market inefficiencies.

1.c. Company Highlights

Last Price	104.5
Change Percentage	-4.22%
Open	108.5
Previous Close	109.1
Market Cap ( Millions)	16845
Volume	74942
Year High	115.6
Year Low	68.3
M A 50	101.6
M A 200	89.43

FCF Yield	4.82%
Dividend Yield	1.67%
ROE	18.07%
Debt / Equity	103.33%
Net Debt / EBIDTA	139.19%
Price To Book	5.96
Price Earnings Ratio	33.07
Price To FCF	20.75
Price To sales	2.16
EV / EBITDA	14.93

2. Knorr-Bremse's Strong FY 2025 Results: A Closer Look

Knorr-Bremse delivered a robust financial performance in FY 2025, with total revenues reaching almost EUR 8 billion, slightly up in organic terms. The operating EBIT margin improved significantly, driven by a strong contribution from the Rail division, which achieved a 16.5% EBIT margin, ahead of its midterm target. The company's EPS came in at EUR 0.742, below analyst estimates of EUR 0.88. Despite this, Knorr-Bremse's BOOST strategy is yielding results, with the company achieving its full-year 2025 guidance and issuing a solid 2026 outlook. The group's operating margin increased by 70 basis points to 13%, driven by operating leverage and efficiency initiatives from the BOOST program.

Publication Date: Feb -22

                                    📋 Highlights
                                    Revenue Growth and Margin Expansion:
                                                Knorr-Bremse achieved nearly EUR 8 billion in revenue, with a 70 bps increase in group operating margin to 13%, driven by Rail's 16.5% EBIT margin and Truck's 10.4% margin.
Strategic Restructuring Success:
                                                Divested EUR 400 million in low-margin businesses (avg. <5% EBIT) and acquired EUR 600 million in high-margin assets (15%+ EBIT), enhancing portfolio quality.
Free Cash Flow and Liquidity:
                                                Generated record EUR 790 million in free cash flow (131% cash conversion) and reduced net debt by 31% to EUR 627 million, with equity ratio rising to 36%.
2026 Outlook and Guidance:
                                                Targets EUR 8–8.3 billion revenue and 14% EBIT margin, with free cash flow of EUR 750–850 million, aligning with midterm profit improvement goals.
Rail Division Leadership:
                                                RVS now contributes 55% of total revenue and achieved its midterm margin target a year early, with strong order intake (6% growth) and backlog (8% growth).

                                

Segmental Performance

The Rail division delivered strong margin-accretive growth, with RVS now representing around 55% of total group revenues. The CVS division showed disciplined cost management and solid performance despite a tough truck market backdrop. The company's greenfield strategy is focused on driving revenue growth and margin expansion, particularly in rail and truck. Knorr-Bremse is investing in wayside signaling and its CVS service platform, aiming to build a global high-quality wayside signaling portfolio.

Outlook and Guidance

Knorr-Bremse expects 2026 to be a good year, with a solid book-to-bill ratio around 1 or slightly higher in rail, and slightly increasing demand in truck. The company is targeting revenues of EUR 8-8.3 billion, an EBIT margin of 14%, and free cash flow of EUR 750-850 million for 2026. Analysts estimate next year's revenue growth at 6.6%. The company's objective is to put Knorr-Bremse on several strong profit pools to reduce cyclicality and grow profitability.

Valuation and Financial Metrics

With a P/E Ratio of 36.52 and an EV/EBITDA of 16.34, Knorr-Bremse's valuation suggests that the market is pricing in a certain level of growth and profitability. The company's ROE is 18.07%, indicating a strong return on equity. The Net Debt / EBITDA ratio is 1.39, indicating a manageable level of debt. The Free Cash Flow Yield is 4.36%, which is a positive indicator. Overall, Knorr-Bremse's financial performance and guidance suggest that the company is on track to deliver on its strategic objectives.

3. NewsRoom

Is Daimler Truck Holding AG - Sponsored ADR (DTRUY) Stock Outpacing Its Auto-Tires-Trucks Peers This Year?

Feb -25

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Knorr-Bremse Q4 Earnings Call Highlights

Feb -19

Source:

Do Its Financials Have Any Role To Play In Driving Knorr-Bremse AG's (ETR:KBX) Stock Up Recently?

Jan -29

Source:

Is Knorr-Bremse AG (ETR:KBX) Trading At A 33% Discount?

Dec -30

Source:

Discover 3 European Stocks Believed To Be Trading Below Intrinsic Value

Oct -02

Source:

Should You Investigate Knorr-Bremse AG (ETR:KBX) At €86.10?

Sep -16

Source:

Global Market's 3 Value Stock Picks For Estimated Growth

Aug -25

Source:

Knorr-Bremse AG's (ETR:KBX) Stock Has Shown A Decent Performance: Have Financials A Role To Play?

Aug -22

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.99%)

6. Segments

Commercial Vehicle Systems

Expected Growth: 1.8%

Knorr-Bremse's Commercial Vehicle Systems growth is driven by increasing demand for heavy-duty trucks, buses, and trailers, fueled by rising global trade and e-commerce. Additionally, stringent emissions regulations and safety standards boost demand for advanced braking systems, while the company's strong OEM relationships and expanding aftermarket business also contribute to growth.

Rail Vehicle Systems

Expected Growth: 2.2%

Knorr-Bremse's Rail Vehicle Systems segment growth of 2.2% is driven by increasing demand for efficient and safe rail transportation, urbanization, and government investments in rail infrastructure. Additionally, the company's focus on innovative braking systems, electrification, and digitalization solutions also contribute to its growth.

Other Segments and Consolidation

Expected Growth: 1.5%

Knorr-Bremse's Other Segments and Consolidation growth of 1.5% is driven by increasing demand for rail services, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on digitalization, innovation, and cost optimization initiatives contribute to its growth. Furthermore, the segment benefits from a diversified customer base and a strong market position, enabling it to capitalize on growth opportunities.

7. Detailed Products

Braking Systems

Knorr-Bremse's braking systems are designed for rail and commercial vehicles, providing reliable and efficient braking solutions.

Door Systems

Knorr-Bremse's door systems provide reliable and efficient door operation for rail vehicles, ensuring safe and comfortable passenger experience.

Air Supply Systems

Knorr-Bremse's air supply systems provide reliable and efficient air compression and distribution for rail vehicles.

Control Systems

Knorr-Bremse's control systems provide advanced control and monitoring solutions for rail vehicles, ensuring safe and efficient operation.

Auxiliary Power Systems

Knorr-Bremse's auxiliary power systems provide reliable and efficient power supply for rail vehicles, ensuring continuous operation.

Aftermarket Services

Knorr-Bremse's aftermarket services provide maintenance, repair, and overhaul services for rail vehicles, ensuring optimal performance and reliability.

8. Knorr-Bremse Aktiengesellschaft's Porter Forces

Forces Ranking

Threat Of Substitutes

Knorr-Bremse Aktiengesellschaft operates in the automotive and rail industries, where substitutes are limited, but the company's products are highly specialized, reducing the threat of substitutes.

Bargaining Power Of Customers

Knorr-Bremse's customers are primarily large automotive and rail companies, which have limited bargaining power due to the company's specialized products and strong market position.

Bargaining Power Of Suppliers

Knorr-Bremse relies on a diverse supplier base, but some suppliers have significant bargaining power due to their size and market dominance, which could impact the company's operations.

Threat Of New Entrants

The automotive and rail industries have high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to compete with Knorr-Bremse.

Intensity Of Rivalry

The automotive and rail industries are highly competitive, with several established players competing for market share, which increases the intensity of rivalry for Knorr-Bremse.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	44.73%
Debt Cost	3.96%
Equity Weight	55.27%
Equity Cost	8.64%
WACC	6.55%
Leverage	80.93%

11. Quality Control: Knorr-Bremse Aktiengesellschaft passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

CIE Automotive

A-Score: 6.1/10

Value: 6.9

Growth: 5.3

Quality: 2.7

Yield: 6.2

Momentum: 7.0

Volatility: 8.3

1-Year Total Return ->

Valeo

A-Score: 5.0/10

Value: 8.3

Growth: 4.0

Quality: 2.5

Yield: 4.4

Momentum: 8.5

Volatility: 2.0

1-Year Total Return ->

HELLA

A-Score: 4.8/10

Value: 3.6

Growth: 5.7

Quality: 4.7

Yield: 2.5

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

Knorr-Bremse

A-Score: 4.7/10

Value: 2.6

Growth: 3.4

Quality: 5.3

Yield: 3.8

Momentum: 6.5

Volatility: 6.3

1-Year Total Return ->

Forvia

A-Score: 4.1/10

Value: 9.4

Growth: 3.2

Quality: 1.5

Yield: 1.2

Momentum: 8.0

Volatility: 1.3

1-Year Total Return ->

Continental

A-Score: 3.9/10

Value: 5.1

Growth: 3.3

Quality: 2.6

Yield: 5.6

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.60%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.55%

Knorr-Bremse Aktiengesellschaft - DE000KBX1006

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on KBX

1.c. Company Highlights

Lower Growth

Fairly Valued

Medium Volatility

Earnings Beats

Stable Momentum

Revenues Miss

Expensive

Strong Momentum

Earnings Miss

Less Volatile

Average Quality

Average Growth

Revenues Beats

2. Knorr-Bremse's Strong FY 2025 Results: A Closer Look

Segmental Performance

Outlook and Guidance

Valuation and Financial Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.99%)

6. Segments

Commercial Vehicle Systems

Expected Growth: 1.8%

Rail Vehicle Systems

Expected Growth: 2.2%

Other Segments and Consolidation

Expected Growth: 1.5%

7. Detailed Products

Braking Systems

Door Systems

Air Supply Systems

Control Systems

Auxiliary Power Systems

Aftermarket Services

8. Knorr-Bremse Aktiengesellschaft's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Knorr-Bremse Aktiengesellschaft passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

104.5$

Current Price

104.5$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA