Safran SA (SAF.PA) | Investment Case

1. Company Snapshot

1.a. Company Description

Safran SA, together with its subsidiaries, engages in the aerospace and defense businesses worldwide.The company operates through three segments: Aerospace Propulsion; Aircraft Equipment, Defense and Aerosystems; and Aircraft Interiors.The Aerospace Propulsion segment designs, develops, produces, and markets propulsion and mechanical power transmission systems for commercial aircraft, military transport, training and combat aircraft, civil and military helicopters, and drones.

This segment also offers maintenance, repair, and overhaul services, as well as sells spare parts.The Aircraft Equipment, Defense and Aerosystems segment provides landing gears and brakes; and engine systems and equipment, such as thrust reversers and nacelles.This segment also offers avionics, such as flight controls and onboard information systems; security systems, including evacuation slides, emergency arresting systems, and oxygen masks; onboard computers and fuel systems; electrical power management systems and associated engineering services; and optronic equipment and sights, navigation equipment and sensors, infantry, and drones, as well as sells spare parts.

Its products and services are used in civil and military aircraft, and helicopters.The Aircraft Interiors segment designs, develops, manufactures, and markets aircraft seats for passengers and crew; cabin equipment, overhead bins, class dividers, passenger service units, cabin interior solutions, chilling systems, galleys, electrical inserts, and trolleys and cargo equipment; and water distribution equipment, lavatories, air systems, and in-flight entertainment and connectivity systems.Safran SA was incorporated in 1924 and is headquartered in Paris, France.

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1.b. Last Insights on SAF

Safran's recent performance was driven by robust revenue growth and strategic advancements. The company's Full Year 2025 earnings call highlighted a 14.8% organic revenue growth and 28% increase in engine deliveries. Additionally, Safran raised its guidance for 2026 and beyond, forecasting 10% growth for the next two years. Record LEAP deliveries and surging aftermarket demand also contributed to the positive outlook. Furthermore, the company is exploring alternative rare earth suppliers amid geopolitical tensions, ensuring a stable supply chain.

1.c. Company Highlights

Last Price	324.3
Change Percentage	-3.51%
Open	332.2
Previous Close	336.1
Market Cap ( Millions)	135074
Volume	190530
Year High	350.8
Year Low	190.7
M A 50	316.46
M A 200	293.91

FCF Yield	3.32%
Dividend Yield	0.89%
ROE	51.15%
Debt / Equity	40.25%
Net Debt / EBIDTA	-14.51%
Price To Book	9.12
Price Earnings Ratio	18.87
Price To FCF	30.11
Price To sales	4.33
EV / EBITDA	23.87

2. Safran's 2025 Earnings: Strong Revenue Growth and Margin Expansion

Safran's 2025 financial performance was impressive, with revenue reaching EUR 31.3 billion, a 14.7% increase driven by strong demand in civil aerospace and defense. The company's recurring operating income was EUR 5.2 billion, with an operating margin of 16.6%, up 150 basis points. Net income attributable to the parent was EUR 3.2 billion, up 3% year-over-year, and earnings per share (EPS) came in at EUR 3.75, slightly below analyst estimates of EUR 4.28. The company proposes a EUR 3.35 dividend per share, up 16% year-on-year.

Publication Date: Feb -14

                                    📋 Highlights
                                    2025 Revenue Growth::
                                                EUR 31.3B (+14.7% YoY), driven by civil aerospace and defense demand.
Operating Margin Expansion::
                                                16.6% margin (+150 bps YoY) with EUR 5.2B recurring operating income.
Dividend Increase::
                                                EUR 3.35/share (+16% YoY), returning EUR 2.6B to shareholders in 2025.
LEAP Engine Deliveries::
                                                1,802 units (+28% YoY), supporting 2026 growth expectations (+15% target).
2028 Strategic Targets::
                                                Revenue growth ~10%, propulsion margin 22–24%, and EUR 21B cumulative free cash flow (2024–2028).

                                

Operational Highlights

In 2025, Safran delivered a record 1,802 LEAP engines, up 28% versus 2024, and secured a new Rafale export contract with the Indian Navy. The company achieved a 1.6 book-to-bill ratio in defense electronics and continued to execute on its strategic priorities. The supply chain situation is improving, with noticeable improvements across the board in 2025, although challenges remain, particularly in raw materials, forging, and casting.

Outlook and Guidance

For 2026, Safran expects revenue growth in the low to mid-teens, with recurring operating income between EUR 6.1 billion and EUR 6.2 billion. The company anticipates a 15% increase in LEAP deliveries and continued growth in civil aftermarket activities. Safran's 2028 targets have been raised, with revenue compound annual growth expected to be around 10% and EBIT guidance increased by EUR 1 billion.

Valuation and Metrics

With a P/E Ratio of 32.19 and an EV/EBITDA of 50.53, Safran's valuation multiples indicate a premium relative to its historical averages. However, the company's strong growth prospects and improving profitability metrics, such as a 14.92% ROIC and a 36.93% ROE, justify a premium valuation. The Dividend Yield of 0.87% is relatively modest, but the company's commitment to returning capital to shareholders is evident in its proposed dividend increase.

Business Segment Performance

The civil engines business continues to drive growth, with spare parts revenue up 18% in 2025. The company expects mid-teens growth in spare parts revenue in 2026, driven by price increases and higher work scope. The defense electronics segment is also performing well, with a 1.6 book-to-bill ratio and strong demand for guided weapons, inertial navigation systems, and missile propulsion.

Key Drivers and Risks

The company's growth is driven by increasing demand for LEAP engines and civil aftermarket activities. However, risks remain, particularly related to supply chain challenges and the potential impact of certification rules on wide-body aircraft production. Safran's management has demonstrated its ability to navigate these challenges and execute on its strategic priorities.

3. NewsRoom

Safran (ENXTPA:SAF) Valuation Check After Recent Share Price Momentum

Mar -02

Source:

European Defense Stocks Rise on Middle East Conflict

Mar -02

Source:

GE Aerospace Is Linking Up with Palantir. Should You Buy GE Stock Here?

Feb -25

Source:

Goldman Team Says Asset-Heavy Stocks Outperform on AI Fears

Feb -24

Source:

GE Aerospace Stock Wins Big as Engine Battle Roars on

Feb -19

Source:

Is Safran (ENXTPA:SAF) Still Attractive After Strong Multi Year Share Price Gains

Feb -15

Source:

Assessing Safran (ENXTPA:SAF) Valuation After Recent Share Price Momentum

Feb -15

Source:

HM King Mohammed VI Presides Over the Launch Ceremony of the Aircraft Landing Gear Production Plant Project, Representing an Investment of €280 million by the Safran Group in Morocco

Feb -13

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.32%)

6. Segments

Aerospace Propulsion

Expected Growth: 7.3%

Safran SA's Aerospace Propulsion systems benefit from increasing demand for fuel-efficient engines, growth in commercial air travel, and rising defense spending, driving segment growth.

Aeronautical Equipment, Defense and Aerosystems

Expected Growth: 4.5%

Safran SA's aeronautical equipment and defense systems are expected to grow driven by increasing demand for aircraft modernization, rising global security concerns, and growing adoption of digital technologies in the aerospace industry.

Aircraft Interiors

Expected Growth: 8.5%

Safran SA's aircraft interior systems and components segment will benefit from growing demand for air travel, increasing focus on passenger experience and comfort, and rising adoption of advanced materials and technologies.

Unallocated Currency Hedges

Expected Growth: 4.5%

Safran SA's unallocated currency hedges management benefits from increasing global trade, rising demand for risk management, and growing adoption of derivatives.

Holding Company and Other

Expected Growth: 5.5%

Safran SA, a leading aerospace and defense company, is expected to grow driven by increasing demand for aircraft and defense systems, expansion in emerging markets, and research and development investments in digital technologies and sustainable energy solutions.

7. Detailed Products

Aircraft Engines

Safran designs and manufactures aircraft engines for commercial and military aircraft, including the CFM56 and LEAP engines.

Helicopter Engines

Safran develops and produces helicopter engines, including the Arriel and Makila engines.

Rocket Engines

Safran designs and manufactures rocket engines for launch vehicles, including the Ariane 5 and Vega rockets.

Avionics

Safran develops and produces avionics systems, including flight control computers, navigation systems, and cockpit displays.

Aerostructures

Safran designs and manufactures aircraft structural components, including wings, fuselages, and engine nacelles.

Defense Electronics

Safran develops and produces defense electronics, including optronics, navigation systems, and communication systems.

Biometric Identification

Safran develops and produces biometric identification solutions, including fingerprint, facial, and iris recognition systems.

Cybersecurity

Safran develops and produces cybersecurity solutions, including threat detection, incident response, and security consulting services.

8. Safran SA's Porter Forces

Forces Ranking

Threat Of Substitutes

Safran SA operates in the aerospace and defense industry, where the threat of substitutes is moderate. While there are some substitutes available, they are not easily accessible, and the company's products are highly specialized.

Bargaining Power Of Customers

Safran SA's customers are primarily governments and large corporations, which have limited bargaining power due to the specialized nature of the company's products.

Bargaining Power Of Suppliers

Safran SA relies on a diverse range of suppliers, which reduces the bargaining power of individual suppliers. However, some suppliers may have significant bargaining power due to their specialized products.

Threat Of New Entrants

The aerospace and defense industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which limits the threat of new entrants.

Intensity Of Rivalry

The aerospace and defense industry is highly competitive, with several established players competing for market share. Safran SA faces intense rivalry from companies such as Rolls-Royce, General Electric, and Pratt & Whitney.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.53%
Debt Cost	3.95%
Equity Weight	60.47%
Equity Cost	10.57%
WACC	7.95%
Leverage	65.36%

11. Quality Control: Safran SA passed 6 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

Safran

A-Score: 5.0/10

Value: 1.1

Growth: 4.1

Quality: 7.3

Yield: 0.6

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

Thales

A-Score: 5.0/10

Value: 1.9

Growth: 5.0

Quality: 4.2

Yield: 3.1

Momentum: 10.0

Volatility: 5.7

1-Year Total Return ->

Airbus

A-Score: 5.0/10

Value: 1.9

Growth: 5.6

Quality: 5.2

Yield: 1.2

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

BAE Systems

A-Score: 4.9/10

Value: 2.4

Growth: 6.8

Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 6.0

1-Year Total Return ->

Rheinmetall

A-Score: 4.9/10

Value: 0.2

Growth: 8.6

Quality: 6.2

Yield: 2.5

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

Rolls-Royce

A-Score: 4.8/10

Value: 1.9

Growth: 6.4

Quality: 6.6

Yield: 0.6

Momentum: 9.5

Volatility: 3.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

9.27%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.95%

Safran SA - FR0000073272

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SAF

1.c. Company Highlights

Expensive

Less Volatile

Strong Momentum

Lower Yield

Earnings Beats

Revenues Beats

Revenues Miss

Medium Volatility

Stable Momentum

Average Yield

Better Quality

2. Safran's 2025 Earnings: Strong Revenue Growth and Margin Expansion

Operational Highlights

Outlook and Guidance

Valuation and Metrics

Business Segment Performance

Key Drivers and Risks

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.32%)

6. Segments

Aerospace Propulsion

Expected Growth: 7.3%

Aeronautical Equipment, Defense and Aerosystems

Expected Growth: 4.5%

Aircraft Interiors

Expected Growth: 8.5%

Unallocated Currency Hedges

Expected Growth: 4.5%

Holding Company and Other

Expected Growth: 5.5%

7. Detailed Products

Aircraft Engines

Helicopter Engines

Rocket Engines

Avionics

Aerostructures

Defense Electronics

Biometric Identification

Cybersecurity

8. Safran SA'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: Safran SA passed 6 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

324.3$

Current Price

324.3$

12.e Scoring ^Insights

12.f DCF ^BETA