Analysis of Thales share price for trading

Advanced technologies have always interested investors in the sense that the companies that design it and commercialize them are very often profitable and are kind of easy to analyze because of the innovations it creates. Among these companies, the group Thales undoubtedly represents a favorite investment for trading online and for building a stock market portfolio. Discover how to analyze the price of this title and the specificities of this company.  

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Analysis of Thales share price for trading

Using the elements we have just revealed you should be able to complete a comprehensive fundamental analysis of the Thales share price. But to assist you we have listed below all the elements that you should primarily monitor that could influence the movements in the rising and falling trends of this asset.         

Firstly, we know that the Thales Company competitors play an important role in the way that the company’s share price changes over time. This is particularly the case when announcements are made by two of its competitors; BAE Systems and Finmeccanica. It is also recommended to monitor the consolidation of Thales position in this activity sector and any major new contracts that the group may win during the coming months and years.  

The Thales Group has also recently implemented a new strategy with a plan entitled ‘Ambition Boost’ the details of which are explained on the company’s website. It is of course primordial to monitor the implementation of this plan notably as related to the achievement of its fixed objectives and the completion of certain projects.

Thales Order Book is of course of capital interest as all new major orders are listed there. We would notably recommend the monitoring of orders pending from the Middle East and India relating to equipment in the space domain or naval sector.

As we noted earlier, the Thales Group invests heavily in R & D notably in the areas of big data, mobile connectivity, cyber security and artificial intelligence. It is therefore important to take into account all mergers and acquisitions with companies specialised in these activity sectors.

Finally it is important to remember that Thales as a stock market asset is not operable at present as the French state and Dassault Aviation currently remain the two principal shareholders. The participation of the French state however may shortly be adjusted to 26.4%. 

By wisely using this important information you will be in a position to decide if the Thales Group is more susceptible to growth or, on the contrary to decrease in profitability over the coming years. But of course this fundamental analysis is not sufficient to obtain totally reliable signals so you also need to compare the results obtained with those of a complete and objective technical analysis preferably based on several high quality indicators. In this way you will be more likely to correctly detect future trends.

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About Thales :

The group Thales specializes in the manufacturing and marketing of advanced electronic equipment and systems for aerospace, transportation, defense and security. Its main activities are divided in defense and security systems, aerospace system, transport systems and naval equipment.

Since this is a French company, its activity is mostly developed in France and in Europe, but it also reaches Asia, North American, the Middle East, Australia, Africa and Latin America. It currently counts with more than 60 000 employees.

 

Thales’ main competitors:

The group Thales is one of the world’s biggest companies specialized in satellite and avionics technologies and remains one of the leaders in this market. However, it is in competition with a few other companies which are in a constant war to gain shares in the market and to sign contracts that are generally very lucrative. It is therefore better to inform yourself about the competition in this sector of activity before embarking on a fundamental analysis or take a stand about this title. To help you, here is the list of the main competitors of this company around the world, categorized by profitability and importance.

Safran is undoubtedly Thales’ most important competitor, since the two companies are almost tied as the leaders in the ranking of companies in this sector.

Then comes the Company Dassault Aviation, which remains however far behind with a turnover of almost half the size.

Finally, the fourth place of this ranking is held by the Company Zodiac Aerospace which closely follows Dassault Aviation.

 

Thales main partners:

The group Thales has also established certain partnerships with other big companies in order to carry out certain projects and to multiply its sectors of activity.

It has thus associated with the company Alstom as part of a 330 million Euros contract issued by MTR Corporation for the upgrading of the signaling systems of 7 lines of the Hong Kong subway.

In 2016, ENGIE and Thales announced the signing of a contract to strengthen the security of its energy efficient IT infrastructure. Thales was supposed to provide 24/7 security supervision of ENGIE’s computer system during a period of five years.

The French technology group Thales and the French subsidiary of the American company Microsoft also established a partnership for the launching of new services that allow to encrypt sensitive information before sending e-mails or storing them in the “cloud”.

 

Analysis of the price of Thales Shares:

It is easy to anticipate an increase in the price of Thales shares when the group launches an innovation. Apart from this, the technical analysis shows us it sharp movements in the short term and in the long term.

The dividends of this title are expected to increase over the next two years according to the opinion of analysts specialized in this sector of activity who are very optimistic about it.

 

Thale’s economic and financial history:

In order to carry out an accurate and objective analysis of the price of Thales shares, it is essential to master the indicators of the technical analysis and to be able to interpret effectively the data of the fundamental analysis. To help you, lets immerse ourselves in the financial and economic history of this group in order to remember the events that have marked the evolution of this title in the stock market.

First of all, lets recall that in 1998, the French governments signed a cooperation agreement between the aerospace companies, Alcatel and Dassault, planning to give shares to Thomson-CSF and to consolidate the space activities of Alcatel, Aerospace and Thomson-CSF into one joint venture called Alcatel-Space in order to consolidate its competitiveness in the sector of defense and industrial electronics and its implementation in the European market. The companies Alcatel and Dassault Industries became then shareholders and the State only owns a minority share of 40%.

The expansion of Thales continued in the year 2000 with the takeover of the British company Racal Electronics, which boosted the sector of technology and information and mobile telecommunications. That same year, the company reorganized itself into three sectors: defense, aeronautics and information and service technologies, and Thomson-CSF officially became Thales’. In the process, the group announced its intention to create a joint venture with Raytheon named Thales Raytheon Systems which will put together the activities of military command and radar interfaces of both companies.

  • In 2004, Thales planned an approach to the company EADS but at the end, this approach did not take place.
  • In 2005, Thales finally moved closer to DCNS by acquiring 25% of its capital in order to make itself a place in the sector of European Naval military and to create the Airbus Naval.
  • In 2006, Thales obtained the Australian government’s agreement to buy the company ADI (Australian Defense Industries) which specializes in the manufacture of military equipment such as smokeless power, all the products of the brand ADI were, that same year, replaced by products of the brand Thales, the website of the company was changed too.
  • In 2007, Thales signed an agreement with the company Alcatel-Lucent to transfer its transport, security and space activities to Thales and then, a new agreement concerning this time the creation of a joint venture called “Thales Alenia Space”.
  • In 2009, Dassault Aviation bought the shares of Alcatel-Lucents and acquired 25.90% of the shares of the group Thales. That same year, Thales also participated in the design of BoostAeroSpace.
  • In 2011, Thales implemented the fusion of its subsidiaries Thales Communications and Thales security Solutions & services by creating a new entity named Thales communication & Security. In December of that same year, the group increased its stake of DCNS to 35% and planned to invest in the company Nexter. It then created a joint venture with the group Safran regarding the management of programs in the field of optronics following a negotiation of two years.
  • In 2014, Thales took over the cybersecurity activities of Alcatel-Lucents.
  • In 2015, Australia announced the acquisition of 1 100 light blinded cars of the brand Hawkei from Thales for 817 million euros. At the same time, Thales acquired Vormetric, an American company that specializes in the protection of corporate data for an amount of 400 million dollars.
  • In 2017, Thales signed a 10 years contract of a billion euros with the French Ministry of Defense.

By matching these important dates with the historical stock market charts, you will be able to understand how Thales shares have responded to the different announcements and thus determine the way it will likely behave in the future with similar announcements.

 

Important stock market data about Thales shares:

In addition to those technical analyzes and its economic history, you should of course know some basic information about Thales shares:

  • In 2017, the total market capitalization of Thales was 19 987.04 MEUR.
  • The number of titles issued by Thales and in circulation on the market is of 211 704 684.
  • The price of Thales shares is currently listed on the compartment A of the Euronext Paris market in France.
  • Thales is also part of the composition of the French stock exchange index CAC all share.
  • Thales shareholding is composed of 46.36% of floating shares, 25.82% of TSA shares, 24.76% of Dassault Aviation’s shares, 2.71% of shares owned by employees and 0.35% of treasury shares.

 

Thales’ economic and strategic organization:

Since the beginning of the 21st century, the organization of Thales has been based on a matrix model with 6 global activities reunited into three sectors which are, aerospace with avionics and space, transports with land transport system, defense and security with secure information communication systems, land and air systems, defense mission systems, but also the company DCNS held by 35% by the group. Finally, an international organization divided on the major countries in which the group operates, Germany, Australia, New Zealand, Canada, United States, France, the Netherlands and the United Kingdom as well as other European countries and emerging countries.

The 6 activities mentioned here replace the 6 divisions set up in 2004 in order to create an organization that gathers the group’s activities into one single subsidiary per country. The Netherlands were the first to be concerned with the creation of Thales Nederland.

The activities of defense and security represent 60% of Thales’s activities and cover an exceptional range of equipment, systems and services destined to military and civilian security forces including:

  • Land defense with missile systems, optronic equipment and armored cars.
  • Missions and defense with airborne surveillance systems, underwater and surface fight systems and naval systems or drones.
  • Air operations with radar equipment, navigation aid equipment, air defense and air traffic control systems.
  • C41 defense and security systems with radiocommunication equipment, Information technology security system, infrastructures networks and systems, protection and critical information system.

The remaining 40% of Thales’ activities concerns aerospace and transportation and includes activities aimed to improve the efficiency, reliability and safety of trade and transport with:

  • Avionic and its wide range of onboard equipment and functions and simulation and training solutions for civil and military aircrafts.
  • Space with satellite space communications or payloads, the fields of observation, science, navigation and infrastructures.
  • The Transport system with the signalization of railway lines and urban networks, integrated supervision systems and the ticketing systems.

In addition to these different areas of activity, Thales also carries out an activity related to radiofrequency sources, microwave sources and imaging subsystems in relation with all the other divisions. It is Thales electron devices that produces radio frequency and microwave sources for communication satellites. The group is the leader in this market worldwide.

Thales is also developing it activities in the field of drones with tactical drones, micro-UAVs, combat drones, anti-drone defense, and everything related to this field.

 

The advantages and strong points of the Thales share price as a stock market asset:

If you are one of the many traders that plan to implement a long term trading strategy on the Thales share price then you should be able to anticipate future variations in this asset price over the coming months and years. Here therefore we will start by detailing the major advantages of this asset that appears to favour a bullish trend and is based on the strong points of this company. 

The primary advantage of the Thales Company is of course its position on the international level relating to the electronic defence sector where it is one of the world leaders with its radar systems, missile systems and other radio systems. It also benefits from a certain reputation as a major player in these advanced technologies. 

Thales has also shown over the last few years that it is capable of developing on the international market. It is notably gaining a market share in the emerging countries where it is currently achieving around 30% of its sales as well as around 24% in France and 10% in the United Kingdom. The geographical distribution in other parts of the world is also advantageous with 22% of its sales in the rest of Europe, 13% in Asia and a strong presence in the Middle East.

Investors that are interested in Thales shares will appreciate the high visibility provided by this company relating to its future activity. In fact, the order book of this group is particularly full of orders that achieve record levels, notably due to a major demand from emerging countries. Recent orders of Rafales airplanes that are around 25% equipped with Thales technological products also assist in maintaining a high level of orders.

Another strong point of Thales is this time related to the major profitability of the section dedicated to aeronautics and its highly promising position in the transport signalling domain. Thales is in fact the global leader in this particular activity sector. Another noteworthy point is that Thales is currently strengthening its position in the cyber security sector and communications security notably through the recent acquisition of Alcatel-Lucent activities.

We can also count upon the innovative capabilities of this company that practises an active R & D policy. The investment in research and development of this group in fact represents no less than 5% of its revenue and is concentrated on the digital part of its civil sector which is experiencing full growth at present and is therefore more attractive than the military sector.

The Thales Group displays, among other things, a strong and healthy financial situation. Its treasury that amounts to over 2 billion Euros is one of its principle advantages in this case.

Finally, the Thales share price is a choice investment for shareholders given that the company has announced its intention to raise its distribution rate to 40%.

 

The disadvantages and weak points of the Thales share price as a stock market asset:

It is clear that the Thales Group does not simply offer advantages and its stock market share price is also susceptible to falling in the near future. This is why any good investor should also take into account the weaknesses of this group and the disadvantages of this asset the details of which are summarised as follows:

Firstly we would note that the Thales share price displays a strong sensitivity to policy decisions given its significant involvement in the defence sector.

Thales is also particularly exposed to problems related to budgetary cuts in the defence sector that are increasingly frequent in the more developed countries and lead to less investment which could impact the future orders of this company over time.

Specialists in this market have also expressed reservations relating to the commercial success of the Watchkeeper drones that have required considerable investment and are in direct competition with the Patroller drones produced by the Safran Group that show better results and are favoured by the French army.

Although the Thales Group is trying to promote growth worldwide certain geographical sectors such as North America are still showing a weak market share compared with the strong presence of its competitors. For example, Thales only manages to achieve around 11% of its sales in the north of the American continent.

Also, Thales is currently experiencing some technical problems relating to contracts signed for transport signalling as well as structural difficulties in this subsidiary that is still 35% owned by DCNS.

To conclude we can also note that the share price of Thales is also a setback to its purchase. This asset is actually one of the most expensive in its activity sector and is currently achieving its highest historical peaks that do however hinder strategic buys and are penalised recurrently through volatile compensatory troughs.

 

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75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.