MW This stock doubled in the first quarter and is rallying to start the second - even as earnings expectations have declined

By Steve Goldstein

Thyssenkrupp's story is in many ways emblematic of the rally in German stocks

Shares of Thyssenkrupp, the German steel and elevator maker whose stock surged in the first quarter, were rallying again on Tuesday to start the second quarter.

Thyssenkrupp shares (XE:TKA) rose 10%, after a 141% gain in the first quarter.

In many ways, Thyssenkrupp's story is emblematic of the rally in German stocks. Analysts had a target price of EUR5.16 euros at the beginning of 2025, according to FactSet data, and now the share price is double that.

Earnings expectations for this year, however, have fallen, to EUR438 million ($473 million) from EUR466 million at the start of the year, according to FactSet data.

Even earnings expectations for next year haven't improved much, rising by about 3%.

What's happening is that investors are assigning a higher multiple to what the company already has been doing.

Much of that has to do with Germany's constitutional reforms to boost defense spending. Thyssenkrupp has a subsidiary, Thyssenkrupp Marine Systems, that makes submarines. The parent company has said it is looking to spin off a portion of that division through an initial public offering.

That said, the marine systems division is still only a small part of the company, accounting for about 5% of first-quarter revenue.

Thyssenkrupp isn't the only German industrial stock that has soared this year.

Renk Group (XE:R3NK), a maker of engines for both civil and defense use, has seen a similar stock-price surge.

Vincenzo Vedda, chief investment officer at German fund manager DWS, said Thyssenkrupp's gains have been notable because the stock has lagged the market for the last 14 years. "Looking at the German stock market, there are many names among this year's big winners that investors have shied away from for years," he said.

-Steve Goldstein

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April 01, 2025 10:33 ET (14:33 GMT)

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