Sandvik shares: Price analysis before buying or selling

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ISIN code: SE0000667891

Ticker: STO: SAND

Index or market: LSE INTL

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Elements to consider before selling or buying Sandvik shares

Analysis N°1

The group could manage to diversify its portfolio through various mergers and acquisitions. This would enable it to win new contracts and market shares in specific areas.

Analysis N°2

We also know that Sandvik is betting heavily on its international development. It could succeed in positioning itself strategically on certain high-potential markets, particularly in Asia, in emerging markets that promise interesting long-term profitability.

Analysis N°3

Finally, Sandvik has everything to gain by directing its research and innovations towards technological sectors by adapting to new trends. It's a safe bet that the company is already banking heavily on this development.

Analysis N°4

Of course, the greatest threat to Sandvik's business is the very strong competition in this sector. This increased competition means that the group has little bargaining power as a supplier and is forced to lower its prices.

Analysis N°5

The group could also suffer fairly quickly from a shortage of skilled labour, which would of course weigh on production capacity in the long term.

Analysis N°6

Finally, the very high cost of the group's capital and resources leaves no room for error and requires a highly refined profitability management strategy.

Analysis before buying or selling Sandvik shares

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General presentation of Sandvik

The Swedish Sandvik Group is a specialist in industrial equipment. More precisely, it is one of the world's leading manufacturers and distributors of industrial tools and machine tools. However, its activities can be divided into different divisions according to the share of turnover they generate and as follows:

The production and sale of tools and cutting machines generates more than 40.3% of the company's global turnover with a customer base mainly made up of metal factories.

The production and sale of mining and construction machinery and equipment generates more than 38.1% of the group's turnover. This includes drilling trailers, rock drilling tools, excavators and lifting equipment. The Sandvik Group is currently the world leader in this type of product.

The production and sale of special products represent 15.9% of the company's turnover, including tubes, strips, wires, bars, refractory materials, chemical and food processing equipment in stainless steel, special alloys or heat-resistant materials.

Finally, the remaining 5.7% of the turnover comes from ancillary products such as carbide reamers and milling machines.

From a geographical point of view, the Sandvik Group's sales are well distributed internationally. Sandvik generates 19.5% of its sales in Europe, including 3.9% in Sweden, 19.9% in Asia and Australia, 17.4% in North America, 3.4% in Russia, 3.3% in South Africa, 2.9% in Latin America and the remaining 29.7% in the rest of the world.

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The major competitors of Sandvik

As mentioned above, the Sandvik Group is currently one of the world's leading manufacturers of industrial equipment. But of course, it is not alone in its desire to gain market share in this field and faces significant competition from large international companies. It is therefore essential to know these companies in order to better analyze the possibilities of evolution of this action. Here is the list of the main competitors in this sector with a ranking according to the turnover generated.

Hyundai Heavy Industries

First of all, the first place in the world ranking of industrial equipment manufacturers is occupied by Hyundai Heavy Industries based in North Korea, which has an annual turnover of nearly 50 billion dollars.

ABB

The ABB Group, which is the result of a merger between a Swiss and a Swedish company, is the second largest company in this ranking with a turnover of almost 40 billion dollars.

Sinomach

The third place in this world ranking is occupied by the Chinese company Sinomach with a turnover equivalent to that of ABB.

Mitsubishi Heavy Industries

In fourth place, we find the Japanese group Mitsubishi Heavy Industries, which generates a turnover close to 36 billion dollars each year.

China Shipbuilding Industry

In fifth place is another Chinese company, China Shipbuilding Industry, with annual sales of around $33 billion.

Alstom

Finally, in sixth place, we find the French group Alstom with a turnover of around 25 billion dollars.

It is of course essential to take these various competitors into account before taking a position on the Sandvik share price. As part of your fundamental analysis of this stock, you should therefore take care to carry out a complete study of the competition in this sector, taking into account, in particular, the evolution of the market shares of each of these large companies, their annual results or any event likely to have an influence on the stock market, such as major takeovers, mergers or disposals. You can easily find all this information online on specialised websites or in your broker's news feed.

The major partners of Sandvik

In order to achieve optimal development worldwide and maintain growth, the Sandvik Group can count on the support of many other companies with which it regularly enters into strategic partnerships and meaningful alliances. The impact of these partnerships on Sandvik's results and business growth is of course important, as is their likely impact on Sandvik's share price. For this reason, it is strongly recommended that you take into account any future alliances between Sandvik and other companies in competing or complementary industries. You can find this information easily by subscribing to a news feed about this company or directly from your broker. To better understand why this type of alliance is important, here are some examples of the latest partnerships the group has established.

Berenger

First of all, in 2009, Sandvik's subsidiary SMC Sandvik Mining and Construction signed a partnership with the company Berenger for exclusive representation in Morocco. The purpose of this alliance is to allow Berenger to represent and distribute exclusively all Sandvik's mining and construction products and services on the Moroccan market. In return, Berenger will benefit from a better positioning in this market as a reference supplier of quarry equipment.

DMG & Siemens

In 2010 and on the occasion of the Aerospace Symposium held in Orleans, the Sandvik group got closer to DMG and Siemens in the context of future innovations in the field of aerospace. The three companies are thus collaborating by pooling their different skills in order to develop ultralight but highly resistant composite and superalloy parts.

DMG

In 2017, Sandvik once again entered into a strategic partnership with DMG MORI. It should be remembered that DMG was the leading machine tool company at the time. Thanks to this alliance, Sandvik became the only tool manufacturer officially recognized as a Premium Partner of its competitor DMG and the two companies were able to strengthen their international ties.

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The factors in favour of a rise in the Sandvik share price:

First of all, the group's main asset is its very interesting international positioning. Sandvik is present in many markets and sells its products in no less than 130 different countries. It also has a large production force with over 47,000 employees around the world.

As you have seen above, Sandvik is also a highly innovative company that invests continuously in R&D. This innovative capacity has made Sandvik one of the world leaders in certain product categories for which it holds numerous patents. It is this capacity for innovation that has enabled it to become one of the world leaders in certain product categories for which it holds numerous patents. This is notably the case in tools and tooling systems or in advanced stainless steel products. Currently, the group holds no less than 8,000 active patents that generate stable revenues.

Stock market investors and shareholders also appreciate the good financial health of this group, which shows a stable and solid cash flow.

Finally, the Sandvik Group has already proven its ability to reduce production costs through intelligent supply chain optimization.

The factors in favour of a drop in the Sandvik share price:

Firstly, it is regrettable that Sandvik's portfolio is less diversified than that of its competitors. This weakness naturally leads to the loss of certain contracts that could prove to be very profitable for the company and therefore to the loss of market share.

Although Sandvik's production line is particularly well managed, it seems that worker safety is its Achilles heel. The group has a high rate of injuries and a high frequency of injuries, which results in a significant loss of production time.

Another weakness is the company's lack of ability to adapt to current technology, while other companies in this sector are already looking to future technologies, particularly in terms of object connectivity, which is a real challenge for the future.

Finally, we can also deplore the still relatively high cost of the supply chain of the group's factories in raw materials. This high cost has recently led to the closure of two production units and could have a greater impact on the company's profitability in the long term.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What have been Sandvik's recent major acquisitions?

The Sandvik Group has managed to gain notoriety and profitability thanks to a development and growth strategy based on strategic operations. Indeed, several major acquisitions have enabled it to become one of the leaders in its sector starting with the purchase of the American company Varel, specializing in drilling rigs in 2014 and for a sum of 740 million dollars. In 2018, Sandvik also acquired the French company Metrologic Group.

What are the subsidiaries and divisions of the Sandvik Group?

The Sandvik Group currently consists of three independent divisions represented by three major subsidiaries. These are the Sandvik Machining Solutions division, the Sandvik Mining and Rock Technology division and the Sandvik Materials Technology division. This division of the Group's activities enables it to reach different market sectors and segments and thus increase its market position.

How to interpret the Sandvik stock charts?

If you want to make a good analysis of Sandvik stock charts, you must first master technical analysis and the various trend and volatility indicators. We recommend that you carefully choose your chart so that you can customize it in terms of its display, periodicity or even the indicators that you can view live according to your strategy and analysis methods.

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Analysis before buying or selling Sandvik shares