The financial world loves a good mystery, and Thyssenkrupp AG, a German industrial giant, has provided us with just that. While the company's recent financial data doesn't scream "buy" at first glance, a closer look reveals a tantalizing possibility - a sleeping giant on the verge of awakening. Could this be the undervalued, under-the-radar play that savvy investors have been waiting for?

Let's dive into the numbers. Thyssenkrupp's Q1 2024 earnings report paints a picture of a company still grappling with challenges. A negative EBITDA of -1343 million Euros, a negative profit margin, and a quarterly revenue growth that dipped by -10.3% YOY are hardly inspiring.

Source: Thyssenkrupp Investor Relations

However, tucked away in those figures is a spark of hope: a quarterly earnings growth YOY of 9.2%. This seemingly small detail, often overlooked in favor of the larger negative indicators, might be the key to understanding Thyssenkrupp's future trajectory.

The story unfolds like this: Thyssenkrupp has been undergoing a massive restructuring process for several years. Facing pressure from activist investors and a changing global industrial landscape, the company has been shedding non-core assets, streamlining operations, and focusing on its most promising segments. This transformation hasn't been painless, as evidenced by the recent negative figures, but it seems to be finally bearing fruit.

Consider this: Thyssenkrupp's Steel Europe segment has been consistently profitable, and its Materials Services segment has maintained a steady performance. While these segments are considered "old economy" by some, they provide a stable bedrock for the company's more innovative ventures. The real potential for growth lies in Thyssenkrupp's Automotive Technology and Decarbon Technologies segments.

Automotive Technology, despite the cyclical nature of the industry, is poised for significant expansion, driven by the global shift towards electric vehicles. Thyssenkrupp is strategically positioned to benefit from this trend, supplying crucial components for electric drivetrains and battery production. Imagine: Thyssenkrupp parts could soon be powering the electric cars of the future.

Even more exciting is the potential of Thyssenkrupp's Decarbon Technologies segment. The world is hungry for green solutions, and Thyssenkrupp is delivering. From green hydrogen production to cutting-edge carbon capture technologies, this segment is at the forefront of the global fight against climate change. Investing in Thyssenkrupp Decarbon Technologies isn't just about financial gain; it's about supporting a company shaping a sustainable future.

The current low price of Thyssenkrupp ADRs reflects the market's lingering skepticism about the company's turnaround. Investors are hesitant, remembering the past struggles and focusing on the current negatives. But what if this hesitation is creating an opportunity? What if the market is failing to recognize the significance of that 9.2% earnings growth and the potential it represents?

Here's our hypothesis: The 9.2% earnings growth in Q1 2024 is not a fluke but an early indicator of a larger trend. As Thyssenkrupp's restructuring efforts continue to gain traction, and its Automotive Technology and Decarbon Technologies segments tap into the burgeoning electric vehicle and green technology markets, the company's earnings will continue to climb. The current low price of its ADRs, coupled with a forward PE ratio of 13.7931, suggests a significant upside potential.

To put this into perspective, if Thyssenkrupp achieves an annual earnings growth of even 15% for the next five years, its earnings per share would rise from the current -3.99 Euros to approximately 2.5 Euros. With a PE ratio of 20, a conservative estimate for a company operating in these growth sectors, the share price could reach 50 Euros, a more than six-fold increase from its current price.

Of course, this is just a hypothesis, and several factors could influence Thyssenkrupp's future performance. Macroeconomic conditions, competition within the electric vehicle and green technology sectors, and the successful execution of the company's restructuring plans will all play a role. Investors should conduct their own thorough research and consider the risks involved before making any investment decisions.

"Did you know that Thyssenkrupp built the first underwater elevator? Installed in a cruise ship in 2004, this feat of engineering exemplifies the company's innovative spirit and its ability to push boundaries. Just as it revolutionized elevator technology, Thyssenkrupp is now poised to revolutionize the automotive and green technology landscapes."

Source: Thyssenkrupp Elevator