Atlas Copco AB

Atlas Copco maintains a conservative capital structure with a debt-to-equity ratio of 0.35 and $14.5 billion in cash and equivalents, though net cash is negative after subtracting total debt. The company generates $16.1 billion in annual operating cash flow and $8.5 billion in free cash flow, supporting liquidity and reinvestment capacity. A current ratio of 1.51 indicates moderate short-term liquidity coverage.

The company's return on equity of 7.8% and return on assets of 3.86% underperform the industrial machinery sector medians of 12.4% and 6.1%, respectively, suggesting operational efficiency lags behind peers. Gross margin of 42.8% (19.16 billion SEK gross profit on 44.8 billion SEK revenue) is in line with industry norms, but operating margin of 21.1% (9.47 billion SEK operating income) trails the sector median of 24.3%.

Geographically, Atlas Copco derives 58% of revenue from Europe, 24% from Asia-Pacific, and 18% from the Americas. Segment-wise, the Compressors Technique division accounts for 62% of revenue, followed by Construction Technique (28%) and Power Technique (10%). This concentration in Europe and compressors exposes the company to regional economic cycles and product-specific demand shifts.

Revenue growth is projected at 4.2% for FY2024 and 3.1% for FY2025, below the sector's 5.8% and 4.9% growth forecasts, respectively. The company's capital expenditure of -2.55 billion SEK reflects maintenance spending rather than expansion, with capex as a percentage of revenue at -5.7%.

Risk assessment flags include medium liquidity risk due to negative net cash and low dilution risk with only 3.32 billion shares outstanding. The company has no near-term dilution pressure, with no recent ATM or shelf offerings disclosed. Adjustments to valuation models include a 12% discount for below-median ROIC and a 5% premium for stable free cash flow generation.

Recent filings show no material litigation or regulatory actions, though the Q3 2024 earnings call transcript notes supply chain bottlenecks in the Americas. The 2024 annual report discloses exposure to EU carbon pricing regulations affecting manufacturing margins.

Atlas Copco achieved an 11.0% revenue CAGR over four years, demonstrating strong historical top-line growth momentum.

Cash conversion of 2.1 times ranks above the 75th percentile, indicating robust cash generation relative to peers.

Analysts maintain a buy recommendation with a mean price target of 194.58, signaling positive market sentiment.

Revenue declined 4.8% year-over-year in the latest period, signaling a reversal in previous growth trends.

Net income fell 11.3% year-over-year, reflecting significant pressure on profitability in the most recent fiscal year.

The debt-to-equity ratio of 0.35 is below the cohort median, suggesting higher leverage relative to peers.

Medium liquidity and credit risk flags indicate potential vulnerabilities in the company's financial stability profile.

Revenue kr 40.54B, −5,1% YoY; Operating income −4,0% YoY.

• ▍Revenue kr 40.54B, −5,1% YoY
• ▍Operating income −4,0% YoY
• ▍Net income −5,1% YoY
• ▍Free cash flow +24,0% YoY
• ▍Net margin 15.4%

Revenue kr 42.78B, −7,0% YoY; Operating income −15,4% YoY.

• ▍Revenue kr 42.78B, −7,0% YoY
• ▍Operating income −15,4% YoY
• ▍Net income −15,1% YoY
• ▍Free cash flow −82,0% YoY
• ▍Net margin 15.5%

Revenue kr 41.62B, −3,4% YoY; Operating income −8,5% YoY.

• ▍Revenue kr 41.62B, −3,4% YoY
• ▍Operating income −8,5% YoY
• ▍Net income −6,9% YoY
• ▍Free cash flow +2,1% YoY
• ▍Net margin 16.0%

Revenue kr 41.21B, −8,0% YoY; Operating income −10,3% YoY.

• ▍Revenue kr 41.21B, −8,0% YoY
• ▍Operating income −10,3% YoY
• ▍Net income −14,6% YoY
• ▍Free cash flow −13,1% YoY
• ▍Net margin 15.8%

Revenue kr 42.73B; Operating income kr 8.61B.

• ▍Revenue kr 42.73B
• ▍Operating income kr 8.61B
• ▍Net margin 15.4%

Revenue kr 45.99B; Operating income kr 10.02B.

• ▍Revenue kr 45.99B
• ▍Operating income kr 10.02B
• ▍Net margin 17.0%

Revenue kr 43.10B; Operating income kr 9.34B.

• ▍Revenue kr 43.10B
• ▍Operating income kr 9.34B
• ▍Net margin 16.6%

Revenue kr 44.80B; Operating income kr 9.47B.

• ▍Revenue kr 44.80B
• ▍Operating income kr 9.47B
• ▍Net margin 17.1%

Revenue kr 168.34B, −4,8% YoY; Operating income −10,6% YoY.

• ▍Revenue kr 168.34B, −4,8% YoY
• ▍Operating income −10,6% YoY
• ▍Net income −11,3% YoY
• ▍Free cash flow −19,7% YoY
• ▍Net margin 15.7%

Revenue kr 176.77B, +2,4% YoY; Operating income +2,9% YoY.

• ▍Revenue kr 176.77B, +2,4% YoY
• ▍Operating income +2,9% YoY
• ▍Net income +6,2% YoY
• ▍Free cash flow −1,4% YoY
• ▍Net margin 16.8%

Revenue kr 172.66B, +22,2% YoY; Operating income +23,0% YoY.

• ▍Revenue kr 172.66B, +22,2% YoY
• ▍Operating income +23,0% YoY
• ▍Net income +19,4% YoY
• ▍Free cash flow +29,1% YoY
• ▍Net margin 16.2%

Revenue kr 141.32B, +27,4% YoY; Operating income +28,0% YoY.

• ▍Revenue kr 141.32B, +27,4% YoY
• ▍Operating income +28,0% YoY
• ▍Net income +29,5% YoY
• ▍Free cash flow +31,8% YoY
• ▍Net margin 16.6%