Article by Yippee-Ki-Yay

StarragTornos AG: Undervalued Stock or Trap to Avoid? Our Analysis

Buy signal | Free publication | 30 Dec 2025

StarragTornos Group AG: The Merger That Is Shaking Up the Machine Tool Industry!

Presentation: When Two Giants Become a Titan

So, let's talk a little about StarragTornos Group AG, this Swiss gem that is turning heads in the world of industrial precision! Created in December 2023 from the merger between Starrag Group and Tornos Holding, this company is not exactly a start-up fresh out of the garage. No, we're talking about a marriage between two giants, each with more than 125 years of history in their blood.

Based in Rorschacherberg, Switzerland (yes, try saying that three times fast), StarragTornos combines technical expertise in precision machine tools and complementary technologies to form a strong, diversified company that plays a major role in the future of the global metal-cutting machine tool industry.

What exactly do they manufacture? Ultra-precise machines for milling, turning, drilling, grinding and machining metal, composite and ceramic parts. Their customers? Nothing less than the aerospace, energy, medical, luxury goods and transport industries. Yeah, the big guns! With around 2,034 employees worldwide and listed on the SIX Swiss Exchange, this company plays in the big leagues.

Financial Analysis: Ratings out of 5 ⭐

1. Turnover: 3.5/5 📊

Turnover for 2024 stands at CHF 494.05 million, a slight increase on the CHF 409 million recorded in 2023 (+20.8%). This is rather positive! There has been a strong recovery since the low point in 2022 (CHF 317.59 million). However, we are still a long way from the peak in 2019 (CHF 418.13 million).

The trend is towards growth, but the pace remains moderate. Forecasts predict CHF 482.85 million for 2025 and CHF 506.97 million for 2026 – stable but not spectacular growth. It's solid, not explosive.

Verdict: Good recovery momentum, but no rapid growth. A 3.5/5 is deserved for an industrial company in a cyclical sector.

2. Net result: 3/5 💰

Net profit for 2024 stands at CHF 11.85 million, a sharp decline compared to CHF 25.17 million in 2023 (-52.9%). Ouch, that hurts! This drop is due to a significant increase in operating costs (+28% for general and administrative expenses) and production costs, which have skyrocketed.

The net margin fell from 6.15% in 2023 to just 2.4% in 2024. This is clearly a warning sign. However, the forecasts are more optimistic: CHF 23.65 million in 2026 and CHF 26.78 million in 2027. If these forecasts materialise, we will return to acceptable levels.

Verdict: A difficult year in 2024, but there is still hope. A 3/5 rating reflects this mixed situation.

3. Debt: 4/5 💳

With total debt of CHF 60.97 million and equity of CHF 316.11 million, the debt ratio remains very reasonable (around 19.3%). Net debt is even negative in 2024 (CHF -10.38 million according to forecasts), which means that the company has more cash than debt! This is financial solidity.

The company has even increased its debt in a controlled manner (+51% vs 2023), probably to finance post-merger investments. The balance sheet is rock solid.

Verdict: A healthy financial structure. A solid 4/5!

4. Return on Equity (ROE): 2.5/5 📈

The 2024 ROE falls to around 3.7% (11.85 million profit / 316.11 million equity), which is frankly low. Shareholders generally expect double-digit returns. At 3.7%, we are far from that.

However, forecasts show an improvement: 7.2% in 2026 and 7.5% in 2027. This is better, but still not extraordinary. For comparison, an ROE of 15% would be excellent in the industry.

Verdict: Disappointing in 2024, but improving. A 2.5/5 reflects this mixed performance.

5. Market Performance: 2.5/5 📉

Current price: CHF 29.30
Book value per share: CHF 57.3
The share is trading at a discount of nearly 47% to its book value. This could mean two things: either the market is undervaluing the company (opportunity!), or investors doubt its ability to generate future profits.

The 2024 P/E (price/earnings) ratio is around 13.9x (based on 5.46 million shares and EPS of CHF 2.17). This is fairly reasonable, but not particularly attractive given the company's current performance.

Verdict: Undervalued stock, but with uncertainties. A 2.5/5 for this mixed market performance.

Overall rating: 3.1/5 ⭐⭐⭐

Based on a weighted average (as not all criteria carry the same weight), StarragTornos receives an overall rating of 3.1/5. It is a decent company, but there is room for improvement.

Strengths:

  • Solid financial structure with low debt
  • Revenue growth
  • Position in promising markets (aerospace, medical)
  • Globally recognised technical expertise

Weaknesses:

  • Declining profitability in 2024
  • Disappointing ROE
  • Skyrocketing operating costs
  • Uninspiring stock market valuation

Forecasts and Share Value Estimates 🔮

For 2026:

  • Estimated turnover: CHF 506.97 million
  • Estimated net profit: CHF 23.65 million
  • Estimated EPS: CHF 4.37
  • Book value: CHF 63.27 per share

With a target P/E ratio of 12x (conservative given the sector), we would obtain: 4.37 x 12 = CHF 52.44 per share. Applying a 20% discount to account for uncertainties, we arrive at a target value of CHF 42 for 2026.

For 2027:

  • Estimated turnover: CHF 534.10 million
  • Estimated net profit: CHF 26.78 million
  • Estimated EPS: CHF 4.87
  • Book value: CHF 67.14 per share

Same calculation: 4.87 x 12 = CHF 58.44 per share. With a 15% discount (less uncertainty), we arrive at CHF 50 for 2027.

Upside potential: +43% by 2026 and +70% by 2027. Not bad at all if the forecasts come true!

Overall conclusion 🎯

StarragTornos Group AG is a bit like that good old Swiss wine: solid, reliable, but perhaps lacking a little sparkle at the moment. The 2023 merger was a great idea on paper, but 2024 has shown that merging two giants takes time and money.

The financial results are robust, turnover is growing steadily, but profitability is looking grim. For a patient investor willing to wait two to three years for the restructuring efforts to bear fruit, the share price seems undervalued and offers attractive potential gains.

On the other hand, if you are looking for quick returns or generous dividends (CHF 1 per share in 2024, or a 3.3% yield), this may not be the best choice. But if you want to diversify your portfolio with a high-quality Swiss industrial stock at a discount? It is definitely an option to consider.

My advice as a fellow investor: Invest £800 (8% of your portfolio), keep an eye on the 2025 quarterly results, and be prepared to be patient. Rome wasn't built in a day, and neither are mergers! 🏗️

  • Signal : Buy
  • Budget/Investment : Medium
  • Reinforcement required : No
  • Exposure : Medium
  • Horizon : 2 to 3 years
  • Potential profitability : +43% to +70%
  • Ref. ISIN code : CH0002361068