Siemens Energy – Between the AI Boom and Grid Expansion
The Grid Technologies division recorded order intake of nearly EUR 7 billion in the second quarter, an increase of 41.5%. Demand for transformers and switchgear is skyrocketing, and not just because of the energy transition. AI data centers consume vast amounts of electricity, and the grids can barely keep up. Siemens Energy benefits twice over here. On the one hand, from the demand for new hardware, and on the other, from tight capacities that are propping up prices. Management has significantly raised the annual forecast for the segment and expects revenue growth of 25–27% and a margin of 18–20%. That is already close to the old 2028 targets.
Order intake of EUR 17.7 billion for the quarter represents a record. The order backlog climbed to EUR 154 billion. The order-to-revenue ratio of 1.72 indicates that the company cannot fulfill orders fast enough to keep up with incoming demand. Free cash flow before taxes jumped to just under EUR 2 billion, driven by advance payments from customers seeking to secure capacity early. Accordingly, the Executive Board is raising its full-year forecast with confidence. Free cash flow of around EUR 8 billion is expected, nearly double the previous range.
Siemens Gamesa posted an operating loss of just EUR 44 million before special items. A year ago, it was a loss of EUR 249 million. Not yet a profit, but the turnaround is visible. More importantly for investors, the strong capital base allows the company to accelerate share buybacks. Up to EUR 3 billion is expected to be returned this fiscal year, in addition to the EUR 2.4 billion already distributed. Anyone evaluating the total package sees a company that translates structural trends into hard numbers. The stock is currently trading at around EUR 171.98.
RE Royalties – Financing the Energy Transition
RE Royalties has taken a proven model from the commodities sector and applied it to green energy projects. Instead of building wind farms or solar plants itself, the company provides capital to developers without requiring them to give up equity. In return, RE Royalties receives a revenue-based royalty over the entire term, often 20 years or longer. This generates recurring, inflation-protected cash flows. The market for this is huge, as AI data centers, electric mobility, and general electrification are driving massive growth in electricity demand. The project pipeline is promising. Currently, approximately CAD 20 million in binding letters of intent, plus another CAD 200 million in potential projects under active review, are awaiting implementation.
More than 120 investments in solar, wind, hydro, and battery projects in North and South America ensure proper risk diversification. Day-to-day operations continue as usual, while the Board of Directors, in consultation with PwC, is evaluating strategic options including partnerships, capital optimization, or a sale. Just recently, the second tranche of USD 800,000 was invested in a US solar portfolio from Solaris Energy. Demand for non-dilutive capital remains strong. Project developers appreciate being able to retain their equity stakes. The business model scales well, as operating costs do not rise at the same rate as the number of projects.
RE Royalties has consistently paid a dividend for over 25 consecutive quarters. The company has since switched to an annual payment schedule, which increases financial flexibility for larger investments. The structural rise in electricity demand driven by digitalization and the green industry is likely to solidify the earnings base in the long term. For investors looking for real, predictable cash flows from the energy transition, the company remains an attractive candidate. The stock is currently trading at CAD 0.42.
E.ON – Solid Grid Operations and Strategic Acquisition
E.ON’s business model revolves around regulated electricity and gas grids in Europe. These provide predictable revenues, largely shielded from geopolitical upheavals or tariffs. In the first quarter of 2026 alone, the group connected its two-millionth renewable energy plant. This is a testament to its operational clout and is clearly reflected in the financials. Adjusted EBITDA rose by 2% to EUR 3.3 billion, while adjusted net profit increased by 7% to EUR 1.34 billion. The full-year forecast remains unchanged. EBITDA is expected to be between EUR 9.4 and 9.6 billion, and net profit between EUR 2.7 and 2.9 billion.
The investment drive is in full swing. EUR 1.4 billion was invested in grid expansion, digitalization, and charging infrastructure in the first quarter, despite weather-related delays in January. At the same time, E.ON is making a move for OVO Energy. The acquisition of the British provider brings 4 million additional customers, bringing the total to around 9.6 million. The purchase price has not been disclosed, and the deal is expected to close in the second half of 2026. In the long term, economies of scale and digital innovations from the UK are to be transferred to continental Europe.
Shareholders benefit directly. For 2025, the dividend is set at EUR 0.57 per share. This marks the eleventh consecutive increase. Management is targeting an annual increase of up to 5% by 2030. Net financial debt stood at EUR 46 billion at the end of the quarter, which could increase the interest burden. Nevertheless, there is room to maneuver, as EUR 5–10 billion in additional investment capital is reserved for further growth. A good half of the financing requirements for 2026 have already been secured on attractive terms. Rating agencies confirm the stable outlook. The stock is a steady, reliable investment for long-term investors. Currently, one share costs EUR 18.375.
The energy transition is opening up profitable niches beyond volatile technology bets. Siemens Energy is capitalizing on the exploding demand for grid infrastructure and driving its share price with record orders and accelerated share buybacks. RE Royalties secures long-term, inflation-protected cash flows from over 120 projects through its royalty model and is currently exploring ways to increase shareholder value. E.ON, as a regulated grid operator, delivers stable earnings, is growing through the OVO acquisition, and is increasing its dividend for the eleventh consecutive time. Three distinct but equally sound tickets to the future of energy infrastructure.
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