First of all, changes in electrical standards must be monitored closely because they have a direct impact on Legrand's activities.
We should also keep an eye on Legrand's operations aimed at developing its activities abroad, particularly in emerging countries. The Legrand group could indeed take advantage of its globalization strategy to increase its revenues.
The current economic crisis and its evolution should also be monitored for the significant consequences it has on sales and therefore on the group's income.
Several companies have proposed buying Legrand in recent years, often with a strong impact on the share price.
The evolution of regulations in this sector of activity is also an important element to take into account, as well as environmental legislation concerning the treatment of industrial waste.
Finally, the competition in this sector must also be closely monitored.
If you are planning to carry out relevant fundamental analysis of Legrand shares, you will of course need to understand who this company is and what its main activities and sources of income are. This is what we suggest you find out right now with a detailed presentation of this group.
The Legrand Group is a French company that operates in the electrical and digital building infrastructure sector. More precisely, it is one of the leaders in this sector in the world today.
Its offer is a complete range that adapts to the low-voltage market in the tertiary, industrial and residential segments, making the company a true reference on a global scale.
The Legrand group has various commercial and industrial establishments not only in France but also throughout the world and in more than 90 countries. It thus benefits from various solid growth drivers over the long term.
It is interesting to note that, in terms of the geographic distribution of the Legrand Group's revenues, it generates more than 82.8% of its sales internationally, with 25.6% in Europe, 39.2% in North and Central America and 18% in the rest of the world.
As regards the distribution of revenues by type of product, 33% of revenues are generated by products with a higher value of use, including data centres, connected products from the Eliot programme and energy efficiency programmes.
The company is also one of the largest capitalisations on the French stock market. Its shares are listed on the Euronext Paris market, in compartment A, and the company is also included in the CAC 40 stock market index.
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It is also important to know the environment in which the Legrand group operates. Let's discover now who are the main competitors of the Legrand group in its sector of activity with a presentation of the main players of the sector at the moment.
First of all, we will rely on the Rexel Group which is a French group specialized in the distribution of electrical, heating, lighting and plumbing equipment as well as renewable energies and energy efficiency products and services, connected housing and tool rental services. The group has 1,900 sales outlets in 25 countries and employs over 24,000 people.
Another major competitor of Legrand is the Schneider Electric group, a French multinational company specializing in the manufacture of electrical management products, automation and solutions adapted to these trades. The Schneider Electric group is also listed on the stock exchange and this company is part of the CAC 40 stock market index as well as other indices such as the Intercontinental Exchange.
We will also follow the competition from the French group Sonepar which is a trading and holding company and is also the leading distributor of electrical equipment, solutions and related services. It was created in 1969 and its shareholding has remained family-owned by the Coisne and Lambert families. Sonepar became a European group in 1982 and is now pursuing its international development through acquisitions. Today, the Sonepar group employs more than 48,000 people through a network of 145 commercial banners and 3,000 branches in more than 48 countries.
Finally, the ABB Group for ASEA Brown Boveri is a Swiss-Swedish company with its headquarters in Zurich, Switzerland and Vasteras, Sweden. This group is one of the most important global players in the energy and automation technology sector. It operates in more than 100 countries and employs around 136,000 people. ABB is also one of the world's largest engineering companies as well as one of the largest conglomerates. In 2017, the group was even ranked 314th in the Fortune Global 500, and it was also the largest employer in Switzerland until 2020 when it sold its electricity division.
In 2014, the Legrand Group signed a joint venture agreement with the Neat Group, which is the Spanish leader in assisted living systems and is also very well positioned on the European market.
In 2015, the La Poste group and Legrand also formalized their partnership aimed at providing their respective and joint customers with offers accessible through a universal platform developed by La Poste, the Digital Hub, and to offer new services to users.
Also in 2015, Legrand signed a technology partnership with the Samsung Group internationally. The main objective of this alliance is to develop offers concerning smart buildings of both companies, especially in the hotel industry.
First of all, the Legrand group enjoys an advantageous position in its sector of activity and on a global scale. Indeed, it is the leader in the world of low-voltage electrical equipment for the building sector. The Legrand Group has a 6% share of the market in this sector, which is considered to be particularly fragmented, which is quite an achievement.
The intelligent organization of the group and its activities is also a real asset. The company's portfolio is organized into four major divisions, with control and command first, followed by cable management, energy distribution and VDI/Dataco. In this way, the Legrand Group is relatively effectively protected from the risk of exposure to a single type of product.
As mentioned above, the Legrand group is one of the leaders in its sector worldwide. But it should also be noted that this company has been pursuing a very well thought-out international expansion strategy for a very long time.
We also appreciate the distribution of the group's products in the different sectors of activity of its customers.
The economic strategy of the group can also be considered as a strong point of this value. Indeed, Legrand manages to maintain its margins by relying on a policy of reinforced innovation. Its numerous investments in R&D and its large portfolio of patents allow it to consolidate its dominant position and to benefit from an undeniable power in setting its sales prices.
Another advantage of the Legrand group is its strong development in the home automation sector, which is currently experiencing interesting growth. The Legrand group is of course making strategic acquisitions of companies in this field, as with the recent purchase of the American group Luxul Wireless.
To conclude with the advantages of Legrand shares, let's also remember that the company has a financial situation that has been praised by critics. The company also has a high payout ratio of over 56%, which is highly appreciated by shareholders.
First of all, it is important to note that the group does not offer good visibility on its order book over the long term. As a result, many investors may be reluctant to buy these shares as part of such a strategy.
The results of recent years may also be a brake on the rise of this share. Indeed, the Legrand group has recorded a drop in its sales in France and in emerging countries for some time. However, it should also be mentioned that sales in the United States and Europe have increased, offsetting losses elsewhere.
The Legrand group also has the disadvantage of having an effective tax rate that is sometimes higher than that of its competitors such as Schneider or Assa Abloy's. As a result, its margins are often lower and its competitiveness is undermined by higher selling prices.
Finally, it should be noted that Legrand shares are currently considered by market analysts to be a relatively expensive stock. Also, each time sales slow down or forecasts drop, investors penalize this stock, which can experience steep and unexpected declines.
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