Rational Earnings: Backlog Execution and Pricing Supports Record-High Revenue

Narrow-moat Rational delivered impressive 25% revenue growth to EUR 282 million, a record high for the group during the first quarter and slightly below its all-time highest quarterly revenue (achieved in the previous quarter). Growth was supported by an acceleration of deliveries from its above-average order backlog as supply chain constraints ease, while also benefitting from the spillover effect of price increases implemented last year. Management correctly, do not appear to be getting carried away by the record first-quarter performance, which benefited from factors that are unlikely to persist throughout the year. Full-year guidance was kept unchanged for high-single-digit organic revenue growth and a slight EBIT margin contraction. Shares are trading at a premium to our EUR 570 fair value estimate, which we maintain.