Advanced technologies have always interested investors in the sense that the companies that design it and commercialize them are very often profitable and are kind of easy to analyze because of the innovations it creates. Among these companies,discover how to analyze the Thales shares price and the specificities of this company.
The Thales group had a difficult year in 2020 due to the Covid-19 pandemic. The latter affected the annual results announced by the company for this year.
Firstly, we know that the Thales Company competitors play an important role in the way that the company’s share price changes over time. This is particularly the case when announcements are made by two of its competitors; BAE Systems and Finmeccanica. It is also recommended to monitor the consolidation of Thales position in this activity sector and any major new contracts that the group may win during the coming months and years.
The Thales Group has also recently implemented a new strategy with a plan entitled ‘Ambition Boost’ the details of which are explained on the company’s website. It is of course primordial to monitor the implementation of this plan notably as related to the achievement of its fixed objectives and the completion of certain projects.
Thales Order Book is of course of capital interest as all new major orders are listed there. We would notably recommend the monitoring of orders pending from the Middle East and India relating to equipment in the space domain or naval sector.
As we noted earlier, the Thales Group invests heavily in R & D notably in the areas of big data, mobile connectivity, cyber security and artificial intelligence. It is therefore important to take into account all mergers and acquisitions with companies specialised in these activity sectors.
Finally it is important to remember that Thales as a stock market asset is not operable at present as the French state and Dassault Aviation currently remain the two principal shareholders. The participation of the French state however may shortly be adjusted to 26.4%.
By wisely using this important information you will be in a position to decide if the Thales Group is more susceptible to growth or, on the contrary to decrease in profitability over the coming years. But of course this fundamental analysis is not sufficient to obtain totally reliable signals so you also need to compare the results obtained with those of a complete and objective technical analysis preferably based on several high quality indicators. In this way you will be more likely to correctly detect future trends.
The group Thales specializes in the manufacturing and marketing of advanced electronic equipment and systems for aerospace, transportation, defense and security. Its main activities are divided in defense and security systems, aerospace system, transport systems and naval equipment.
Since this is a French company, its activity is mostly developed in France and in Europe, but it also reaches Asia, North American, the Middle East, Australia, Africa and Latin America. It currently counts with more than 60 000 employees.
The price of Thales shares is currently listed on the compartment A of the Euronext Paris market in France. Thales is also part of the composition of the French stock exchange index CAC all share.
Having optimised your knowledge of the Thales Group and its activities, we propose that you discover who its main competitors are in the market and in its sector.
First of all, this company is the leading American and global company in the defence and security sector. It is responsible for the design and production of various products in which electronics and technology play a major role. The group generates most of its revenue from the US government, but also offers its products elsewhere in the world.
The Boeing Company is an American aircraft and aerospace manufacturer based in Chicago, Illinois. It is an aircraft manufacturer specialising in the design of civil and private aircraft, but also in military aircraft, helicopters, satellites and launchers, through its Boeing Defense, Space & Security division. The group is currently the second largest military equipment seller in the world.
This is a British company active in the defence and aerospace sector. Its headquarters are in Farnborough. The company also has interests in North America through its subsidiary BAE Systems Inc. It is one of the world's leading defence companies and was formed in 1999 by the merger of British Aerospace and Marconi Electronic Systems.
The French Airbus Group is an international industrial cooperation that operates in the aeronautics, space and military sectors. It was founded in 2000 under the name EADS for European Aeronautic Defense and Space Company and is partly owned by Lagardère and Daimler. The Airbus group's capital has been accessible on the stock market since 2013 and the group has gradually merged with its civil aircraft subsidiary, Airbus, from which it has taken its name.
This company, formerly known as Finmeccanica, is currently Italy's number two industrial company and one of the world's leading manufacturers of civil helicopters. It is also one of the world's leading groups in the aeronautics and space sector. The company is specialised in armaments, helicopters, aeronautics, space industry and energy. It is present in about a hundred countries around the world, including Great Britain and the United States, where it has acquired numerous defence companies. The group employs 70,000 people.
Finally, we must also take into account the competition from the American company Raytheon, which specialises in the fields of defence systems and electronics as well as in aerospace. Founded in 1922 in Cambridge, its headquarters are now in Waltham. The company is one of the world's largest military sales companies. In 2020 it merged with the United Technologies group to form Raytheon Technologies.
The group Thales has also established certain partnerships with other big companies in order to carry out certain projects and to multiply its sectors of activity.
It has thus associated with the company Alstom as part of a 330 million Euros contract issued by MTR Corporation for the upgrading of the signaling systems of 7 lines of the Hong Kong subway.
In 2016, ENGIE and Thales announced the signing of a contract to strengthen the security of its energy efficient IT infrastructure. Thales was supposed to provide 24/7 security supervision of ENGIE’s computer system during a period of five years.
The French technology group Thales and the French subsidiary of the American company Microsoft also established a partnership for the launching of new services that allow to encrypt sensitive information before sending e-mails or storing them in the “cloud”.
If you are one of the many traders that plan to implement a long term trading strategy on the Thales share price then you should be able to anticipate future variations in this asset price over the coming months and years. Here therefore we will start by detailing the major advantages of this asset that appears to favour a bullish trend and is based on the strong points of this company.
The primary advantage of the Thales Company is of course its position on the international level relating to the electronic defence sector where it is one of the world leaders with its radar systems, missile systems and other radio systems. It also benefits from a certain reputation as a major player in these advanced technologies.
Thales has also shown over the last few years that it is capable of developing on the international market. It is notably gaining a market share in the emerging countries where it is currently achieving around 30% of its sales as well as around 24% in France and 10% in the United Kingdom. The geographical distribution in other parts of the world is also advantageous with 22% of its sales in the rest of Europe, 13% in Asia and a strong presence in the Middle East.
Investors that are interested in Thales shares will appreciate the high visibility provided by this company relating to its future activity. In fact, the order book of this group is particularly full of orders that achieve record levels, notably due to a major demand from emerging countries. Recent orders of Rafales airplanes that are around 25% equipped with Thales technological products also assist in maintaining a high level of orders.
Another strong point of Thales is this time related to the major profitability of the section dedicated to aeronautics and its highly promising position in the transport signalling domain. Thales is in fact the global leader in this particular activity sector. Another noteworthy point is that Thales is currently strengthening its position in the cyber security sector and communications security notably through the recent acquisition of Alcatel-Lucent activities.
We can also count upon the innovative capabilities of this company that practises an active R & D policy. The investment in research and development of this group in fact represents no less than 5% of its revenue and is concentrated on the digital part of its civil sector which is experiencing full growth at present and is therefore more attractive than the military sector.
It is clear that the Thales Group does not simply offer advantages and its stock market share price is also susceptible to falling in the near future. This is why any good investor should also take into account the weaknesses of this group and the disadvantages of this asset the details of which are summarised as follows:
Firstly we would note that the Thales share price displays a strong sensitivity to policy decisions given its significant involvement in the defence sector.
Thales is also particularly exposed to problems related to budgetary cuts in the defence sector that are increasingly frequent in the more developed countries and lead to less investment which could impact the future orders of this company over time.
Specialists in this market have also expressed reservations relating to the commercial success of the Watchkeeper drones that have required considerable investment and are in direct competition with the Patroller drones produced by the Safran Group that show better results and are favoured by the French army.
Although the Thales Group is trying to promote growth worldwide certain geographical sectors such as North America are still showing a weak market share compared with the strong presence of its competitors. For example, Thales only manages to achieve around 11% of its sales in the north of the American continent.
Also, Thales is currently experiencing some technical problems relating to contracts signed for transport signalling as well as structural difficulties in this subsidiary that is still 35% owned by DCNS.
To conclude we can also note that the share price of Thales is also a setback to its purchase. This asset is actually one of the most expensive in its activity sector and is currently achieving its highest historical peaks that do however hinder strategic buys and are penalised recurrently through volatile compensatory troughs.
In order to carry out an accurate and objective analysis of the price of Thales shares, it is essential to master the indicators of the technical analysis and to be able to interpret effectively the data of the fundamental analysis. To help you, lets immerse ourselves in the financial and economic history of this group in order to remember the events that have marked the evolution of this title in the stock market.
First of all, lets recall that in 1998, the French governments signed a cooperation agreement between the aerospace companies, Alcatel and Dassault, planning to give shares to Thomson-CSF and to consolidate the space activities of Alcatel, Aerospace and Thomson-CSF into one joint venture called Alcatel-Space in order to consolidate its competitiveness in the sector of defense and industrial electronics and its implementation in the European market. The companies Alcatel and Dassault Industries became then shareholders and the State only owns a minority share of 40%.
The expansion of Thales continued in the year 2000 with the takeover of the British company Racal Electronics, which boosted the sector of technology and information and mobile telecommunications. That same year, the company reorganized itself into three sectors: defense, aeronautics and information and service technologies, and Thomson-CSF officially became Thales’. In the process, the group announced its intention to create a joint venture with Raytheon named Thales Raytheon Systems which will put together the activities of military command and radar interfaces of both companies.
By matching these important dates with the historical stock market charts, you will be able to understand how Thales shares have responded to the different announcements and thus determine the way it will likely behave in the future with similar announcements.
Since the beginning of the 21st century, the organization of Thales has been based on a matrix model with 6 global activities reunited into three sectors which are, aerospace with avionics and space, transports with land transport system, defense and security with secure information communication systems, land and air systems, defense mission systems, but also the company DCNS held by 35% by the group. Finally, an international organization divided on the major countries in which the group operates, Germany, Australia, New Zealand, Canada, United States, France, the Netherlands and the United Kingdom as well as other European countries and emerging countries.
The 6 activities mentioned here replace the 6 divisions set up in 2004 in order to create an organization that gathers the group’s activities into one single subsidiary per country. The Netherlands were the first to be concerned with the creation of Thales Nederland.
The activities of defense and security represent 60% of Thales’s activities and cover an exceptional range of equipment, systems and services destined to military and civilian security forces including:
The remaining 40% of Thales’ activities concerns aerospace and transportation and includes activities aimed to improve the efficiency, reliability and safety of trade and transport with:
In addition to these different areas of activity, Thales also carries out an activity related to radiofrequency sources, microwave sources and imaging subsystems in relation with all the other divisions. It is Thales electron devices that produces radio frequency and microwave sources for communication satellites. The group is the leader in this market worldwide.
Thales is also developing it activities in the field of drones with tactical drones, micro-UAVs, combat drones, anti-drone defense, and everything related to this field.
As of July 2020, the Thales Group's shareholding structure is 25.68% owned by the French State. The Dassault Aviation group is the second largest shareholder of this company with 24.62% of the shares. The next largest shareholder is Dassault Aviation, which holds 0.31% of the company's shares in treasury stock. We also note that the group's employees hold 2.87% of the capital and that the rest, i.e. 46.52% of the shares are floating, i.e. traded on the stock market.
Of course, the Thales group is one of the most important French companies and, as such, it must be included in the composition of the French national stock market index CAC 40 because it is among the 40 French companies with the highest market capitalisation. But the Thales group also includes the composition of other stock market indices including the SBF 120, CAC Industrials, EN VIGEO 120, Euronext 100, DJ Eurostoxx, FTSE Euro 300 among others.
The last financial statement published by Thales was for the financial year 2021. This balance sheet showed a 5.3% increase in turnover compared to 2020 to €16.2 billion. Over the same period, the group's net profit reached €1,361 billion, an increase of 45% compared to 2020. Finally, the company's market capitalisation reached €26.56 billion.
