In its preliminary results for the 2025-2026 fiscal year, the group disclosed an adjusted operating margin of approximately 6%, down from 6.4% the previous year and significantly below the previously communicated guidance of around 7%.

Elsewhere on the balance sheet, revenue rose by 4%, or 7% on an organic basis, to 19.2 billion euros, while order intake surged by 39%, or 42% organically, to 27.6 billion euros. Free cash flow stood at approximately 330 million euros, within the company's guidance range of 200 to 400 million euros, but down from the 502 million euros recorded a year earlier.

In another disappointment, the company produced 4,284 cars during the period, a decline compared to the 4,383 units in fiscal 2024-2025. This retreat illustrates the slower-than-expected pace of certain rolling stock projects, thereby extending the ramp-up phase.

Free cash flow margin targets abandoned

The other flashpoint in Alstom's release concerns its outlook. For the 2026-2027 fiscal year, which began in early April, the group is targeting organic revenue growth of approximately 5%, slightly below expectations, and an adjusted operating margin of 6.5%. Regarding the latter, Jefferies analysts note that the market was expecting around 7.1%, and that the 6.5% target implies a downward revision of Ebit by approximately 10%. Alstom aims for positive free cash flow generation, but seasonality is expected to result in a cash burn of approximately 1.5 billion euros in the first half of 2026-2027. Consequently, the target of a cumulative free cash flow of 1.5 billion euros over the three years from fiscal 2024-2025 to 2026-2027 has been scrapped. Finally, the medium-term ambition of an adjusted operating margin of 8% to 10% will not be achieved by the 2026-2027 horizon.

Analysts react

For Jefferies, this annual update is disappointing, although demand remains robust with a continuously growing backlog. The investment bank notes that project execution is hindering progress, particularly regarding free cash flow, which remains the linchpin of the investment thesis. According to Jefferies, the data also reveals that Alstom has room for improvement in operational execution, which should be the top priority for the new Chairman and CEO, who is expected to present an operational plan and new medium-term ambitions. Jefferies maintains a "buy" rating on the stock with a target of 25 euros.

At Deutsche Bank, analysts believe that patience is being pushed to the limit. Following the warning on margin and free cash flow targets for the coming year, the bank has cut its earnings per share estimates by an average of 18% for the coming years and forecasts an increase in the group's debt of 400 to 600 million euros over the 2026-2027 fiscal year. The German bank nevertheless sees significant long-term value creation potential. However, their recommendation has been downgraded from "buy" to "hold," with the price target reduced from 31 to 23 euros.

Oddo BHF highlights that Alstom ended its fiscal year with record activity levels, but that margins were penalized by ramp-up issues on major projects, cost overruns on projects nearing delivery, and one-off difficulties. Like their peers, the analysts explain that the abandonment of the cumulative free cash flow target of over 1.5 billion euros over three years is a consequence of execution issues. They also believe that while the arrival of a new CEO led to fears of a target adjustment, the scale of this revision is unprecedented and "reopens a period of low visibility (and therefore high stock volatility)." Oddo BHF is awaiting two key milestones: Moody's decision (confirmation or otherwise of the Baa3 rating) and the new roadmap expected at year-end. The analysts maintain an "outperform" rating, but the price target has been lowered from 30 to 25 euros.

Finally, at Goldman Sachs, the Ebit forecast was cut by 14% for the current year to reflect Alstom's underperformance in the second half of 2025-2026 and a weaker-than-expected outlook for the current fiscal year. Analysts believe investors should remain cautious until the new leadership provides more clarity, particularly on immediate measures to stabilize performance and the deep operational changes mentioned by the company to restore sustainable execution. Goldman Sachs confirms its "sell" recommendation, lowering its price target from 21.5 to 18.5 euros.