Vestas Wind Systems

Vestas Wind Systems came back from the dead in 2024. After two years of operating losses driven by steel-price inflation and contracts signed at pre-pandemic terms, the Danish wind giant printed EPS growth of more than 1,500% in 2025 as legacy contracts rolled off and new orders carried inflation-adjusted margins. The Service business — long-term operations and maintenance on 175 GW of installed turbines worldwide — now generates over €4B annually with 24% EBIT margins. That cash flow alone underwrites the equity story.

But the macro tape changed in January 2025. The Trump administration cancelled Empire Wind, blocked new offshore leases, and signalled IRA rollback for wind specifically. US offshore wind (a market Vestas had bet heavily on) effectively closed for three years. The pivot of capital is now back to onshore in Europe and Asia-Pacific, where RePowerEU targets and Vietnam-Philippines build-out keep the order book at record levels.

The China question is the other shoe. Goldwind, Envision and Mingyang have moved from 90% domestic-market players to active bidders on European, African and Latin-American tenders — undercutting Vestas pricing by 20-25% in some markets. Vestas has answered with the V236-15MW (the largest production turbine on the planet) and a new EnVentus platform — but the price war is the structural margin risk through 2027.

The Velux Foundation (Villum Fonden, the original Kann Rasmussen estate) holds 14% of Vestas — a permanent, philanthropy-funded, never-sells anchor. BlackRock and Vanguard sit at 4-5% each through passive vehicles. The active-manager signal: Brown Advisory increased its position 40% in Q3/2024 after the inflection in margins, while Climate Active strategies at Pictet and Schroders both maintain top-10 weightings, citing the structural decarbonisation tailwind that survives even US policy reversal.

Short interest peaked at 4.2% in October 2024 — heavily concentrated among US offshore-wind bears — and has since dropped below 2% as the European-onshore order momentum re-rated the company. Multiple sell-side analysts moved from Hold to Buy in Q1/2025 once Vestas raised 2025 EBIT margin guidance to 5-7%.

At DKK 190.9 (€25.6) the stock trades at 30x trailing EPS but only 17.8x forward — reflecting the strong margin-recovery slope. On EV/Sales the stock sits at 1.4x — modest for a company with 33% European market share and a 25 GW annual ship rate. Bull case 2027: EBIT €2.5B, EPS DKK 14.20, fair value at 15x = DKK 213. Bear case (Chinese pricing pressure caps margin at 5%): EBIT €1.8B, EPS DKK 9.50, fair value at 13x = DKK 124 — about 35% downside from here.

The asymmetry comes from the Service annuity. At any reasonable Power Solutions margin path, Service alone is worth roughly DKK 95 per share at a 12x EBIT multiple. So the residual market price of about DKK 95 is what investors are paying for the Power Solutions business that produced €18B of revenue in 2025.

1. Feb 7, 2026: FY2025 results — first read on 2026 EBIT margin guidance and the new order intake trend after Trump tariffs
2. May 2026: Capital Markets Day — updated 2027 financial targets and offshore-wind strategy reset post-US pivot
3. H2 2026: China onshore offshore export tariff decisions — EU anti-subsidy investigation results could lock Chinese OEMs out of European tenders

My view: Vestas is the structural winner of the energy transition outside the US — but the entry-price discipline matters. I prefer to scale in around DKK 160-170, which is closer to 14x forward EBIT and gives margin of safety against another steel shock or further Chinese OEM share gain in Europe. Current DKK 190 prices a clean execution path that depends on EU anti-subsidy protection actually arriving.

The smart-money signal worth respecting: the Velux Foundation has not moved a single share, and active managers added through the 2022-2023 drawdown. This is the longest-duration structural growth story in European industrials — but it is a turbine business, not a software business, and a 22-25x multiple is rich. Patience pays.