Siemens AG (ADR) (SI), Honeywell International Inc. (HON): Here’s Why This German Giant Is No Longer a Good Option

The prospects

At a time when European countries are struggling with austerity drives and financial mismanagement, Siemens is in the eye of the storm and is placed in the worst possible position.

The company’s clientele heavily depends on the developed world, which has reached a maturity stage, thus, only 0.7% revenue growth over the last three years. Siemens relied on China for a surge in revenue and was duly rewarded over the last couple of years, but now, China has shifted its course and is relying on lowered but consistent and prolonged growth. The country’s Q1 and Q2 GDP were 7.7% and 7.5%, respectively; coinciding with two profit warnings in a year.

Furthermore, the problem with Siemens today is of stagnation amid fears of dwindling growth — a three year average of the company’s revenue show only 0.7% growth which is trumped by the industry average of 3.4%. Until and unless Siemens shifts focus on developing countries, its growth prospects will be limited. Its competitor, General Electric, is tapping into Africa and Middle East to fuel its growth, perhaps Siemens should take a note out of the American company’s books.

Verdict

Siemens AG (ADR) (NYSE:SI)’ stock does not show promising signs for 2013 and 2014. It would be wise not to buy this stock as the timing does not favor investors, especially when a better alternative in the form of United Technologies is present, whose wide conglomerate operations shelter is from a slowdown in economy as well.

The article Here’s Why This German Giant Is No Longer a Good Option originally appeared on Fool.com and is written by Awais Malik.

Awais Malik has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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