Bechtle: German Technology Gem Worth a Look

Last Updated: 21. November 2023By

Over the long-term, small-cap stocks generate much higher returns than large blue chips. However, this year the stocks in the second and third tier have lagged significantly behind. While the DAX is currently 14% higher than at the turn of the year, the MDAX has only managed to increase by 4% since January.

In some cases, there has been a veritable buyers‘ strike among small-cap stocks. However, there are also titles that have developed positively. For example Bechtle. Despite the recovery in recent months, the technology pearl still has plenty of room to its record levels.

Bechtle: Leading IT system house in Germany If you are not familiar with Bechtle, I would like to briefly introduce you to the company. The company from the Swabian Neckarsulm is one of the leading providers of information technology for commercial customers in Germany. The customers include mainly medium-sized companies, but also large corporations and customers from the public sector.

With more than 85 IT system houses and IT trading companies in a total of 14 European countries, Bechtle supports its customers in the planning, construction and operation of their IT infrastructure. In addition, the company distributes more than 40,000 hardware and software products.

With this concept – the combination of direct sales of IT products with comprehensive system house services – Bechtle has been on a growth path for many years. Within a decade, revenues have nearly tripled, and profits have more than quadrupled.

Bechtle is continuing to expand its market position through targeted acquisitions. Just a few months ago, the company announced the acquisition of the Spanish IT and cyber security consultant Prosol. The company also plans to expand further in France, the UK and the Netherlands.

Order intake increases significantly A few days ago, the company reported figures. Although Bechtle continues to feel a restraint of medium-sized customers, the company has grown slightly in the third quarter. Revenues increased by 1% to 1.48 billion euros. The pre-tax profit increased by almost 6% to 93.9 million euros. The corresponding profit margin surprisingly increased from 6.0 to 6.3%. In summary, Bechtle earned just under 67 million euros, which is 5% more than in the same period last year.

The management is looking optimistically into the future. The demand from public contractors and large customers is unchanged. So the order intake in the third quarter increased by 18%. According to CEO Thomas Olemotz, in particular demanding digitalization projects to redesign IT architectures are boosting business.

The Bechtle share is heading towards its old highs After a massive downward move in 2022, the Bechtle share has resumed its long-term uptrend. After a consolidation since September, the price rose to the highest level since April 2022 at the beginning of this week.

From a technical chart perspective, the way for further price increases is now clear. The next intermediate target is the interim high from March 2022 at 54 euros. In the long run, however, the Bechtle share could also aim for its old record level from November 2021 at just under 70 euros.