‘Ingenuity for life’ is the Siemens company motto, and for over 170 years, the company has been a global technology pioneer in the areas of electrification, automation and digitalization. As one of the largest European industrial manufacturing companies, Siemens AG began its story on October 12th, 1847, when it was founded by Werner von Siemens and Johann Georg Halske in Berlin, which was then part of the Kingdom of Prussia. The company is headquartered in Berlin and also in Munich, Germany. Siemens started out by building long distance telegraph lines, and a sales crisis early on in its history led the company on its path of ‘internationality’. Initially a survival tactic, Siemens incorporated innovation as part of its core philosophy, and in its quest for global domination, the company has not only managed to change itself but has also shaped the technological path of our world. Siemens first entered the capital markets on June 3rd, 1897, when it was converted into a stock corporation. It was then known as Siemens & Halske and was only reincorporated as Siemens AG in 1966 after performing a major restructuring that saw all its subsidiaries brought under one roof. Siemens continues to trade on the Frankfurt Stock Exchange under the ticker symbol SIEGY. Siemens also made its first listing on the New York Stock Exchange in 2001, but later delisted in 2014 to simplify its financial reporting and improve efficiency. Owing to its various localised operations in different countries, Siemens has also been listed on multiple stock exchanges that include: London, Vienna, Zurich, Geneva, Amsterdam, Paris, Basel and Brussels. Siemens is a global powerhouse operating in the following key reportable segments: Power and Gas, Energy Management, Building Technologies, Mobility, Digital Factory, Process Industries and Drives, Healthineers and Financial Services.
The aptly named Healthineers division is a leading worldwide provider of medical technology and accompanying services, and has been the best performing segment of Siemens, bringing in consistent revenues of about 20%. This medical technology company is headquartered in Erlangen, Germany. A major reason Siemens has been able to survive over the years has been its strategic policy of always maintaining an active portfolio. It means that the company has always been active in doing acquisitions and divestments. Its major buys have included Mentor Graphics Corporation, Rolls Royce Energy Division, Invensys Rail, Power Machines and Bayer Diagnostics. Siemens has also never shied away from making divestitures to improve its bottom line stability and efficiency. Its major divestments include OSRAM, Areva, Siemens Telephone Unit, Dematic and Wireless Modules.
Since going public, and as of January 2019, Siemens has only had one stock split: a 3-for-2 implemented on May 7th, 2001. This was done in a period when the company’s stock was declining in value, and the subsequent lower stock price was designed to attract investment to cushion Siemens against aggressive rivals as well as support its ambitious expansion plans. Siemens has always been a high-value stock despite cycles of boom and bust. The worst period in its history has to be the early 1990s when the company pursued an aggressive acquisition strategy that meant a higher than normal debt accumulation. It is during this time that the stock posted its lowest price ever of circa €18 per stock. It recovered nicely and by the late 1990s, the stock posted a rally that topped out around €130 per stock. A subsequent tumble followed in late 2000, but after the stock split, the stock became a solid performer, even defying the 2005 bribery scandal, and only turning bearish during the 2007/8 global financial crisis. After posting a low of circa €36 per stock on October 2008, Siemens stock trended solidly higher and even touched an all-time high of circa €133 per stock in May 2017. Siemens has a healthy balance sheet and has been a regular and generous dividend payer. Since the turn of the millennium, Siemens has paid out incremental annual dividends from €1.00 a stock in 2000, to a high of €3.70 in 2018. As of January 2019, the lowest dividend yield has been 0.44%, while the highest has been 5.35%. Based on this, the average dividend payout is 3.28%. As a consistent dividend payer and high-value stock, Siemens will continue to be on the watch list of many investors who prefer a steady portfolio.
Siemens is one of the most followed stocks in the world. Still, its diversified global operations mean that it has interesting dynamics every investor should consider when trading it.
Here are some of them:
It is important to assess the performance of its various reportable divisions as well as its growth (or lack thereof) in the major regions it operates in. New government contracts should also be tracked as they can impact heavily on the company’s bottom line.
Siemens is a global technology company based in Germany that leverages multiple facets of the technology revolution to create profitable and useful products. Trading its stock is like trading the success of technology, while also diversifying your trading experience by gaining exposure to a leading German company. The stock also experiences distinct cycles, making it a good choice for all types of traders, from scalpers to swing traders. With its exposure to artificial intelligence and smart technologies it is not only a large established corporation, but is also on the cutting edge of today’s technological growth.
Siemens competes with other global technology companies such as General Electric, and given its cyclical price action it has been an excellent choice for active traders for a number of years. Some traders would certainly say that it is the best multinational technology stock for trading given its liquidity, volatility, and the cyclical nature of its price action. While no stock is completely predictable, Siemens does show some predictability in its price action which makes it a top choice for technology traders looking for some diversification within the German economy.
Because of the cyclical nature of Siemens stock price traders can use a trend following strategy to trade stocks, or they can look for reversals and breakouts to potentially capture larger moves in the stock. This strategy can be implemented through technical analysis of the stock and the use of various indicators. That can also be combined with fundamental analysis of the company’s strengths by analysing the revenues and earnings on a quarterly basis. The stock can see increased volatility around earnings releases, which will potentially give active traders an opportunity to capture surprise moves in the stock, or to enter at the beginning of trends and trend reversals.