Landis+Gyr Group AG (LAND.SW) fair value

ACCE thesis

Landis+Gyr makes smart electricity meters, head-end communications networks and grid-management software that utilities use to bill customers and monitor their distribution networks. Its moat rests on installed base and utility switching costs: once a utility has rolled out millions of meters and integrated them with its billing and outage systems, replacing the vendor is slow and expensive, which gives the company recurring software and services revenue on top of hardware sales. Reported revenue growth of 31.2% is the headline, and the main near-term driver is the wave of utility metering replacement programs, particularly in North America, that the company is bidding into. The forward P/E of 16.7 sits far below the trailing 44.3, which suggests the market expects earnings to catch up with revenue, though a 3.4% ROE and a 10.8% operating margin mean that catch-up has not yet shown up in the numbers. Worth a deeper look to test whether margins can expand as the growth converts to profit.