Key Takeaways:
- Strategic Growth: Saint-Gobain (SGO) is successfully integrating recent acquisitions like CSR (Australia) and FOSROC (chemicals), which are driving double-digit volume growth in key markets.
- Price Projection: Our model projects the stock could climb to €99 per share by December 2027.
- Expected Returns: This target implies a solid 8.3% annualized return, positioning the stock as a steady compounder rather than a high-octane growth play.
- Resilient Operations: Despite a slowdown in new construction in North America and Europe, the company achieved a record operating margin of 11.1% in the last twelve months, demonstrating strong pricing power.
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Compagnie de Saint-Gobain (SGO) is proving that an old industrial giant can learn new tricks.
The French construction materials leader has transformed its portfolio, focusing on “light and sustainable construction.” This strategy is paying off, even in a challenging environment. In Q3 2025, sales grew 1.3% in local currencies, driven by strong dynamics in Asia Pacific and Latin America, where like-for-like sales jumped 6.4%.
Management is also aggressively pursuing growth through acquisitions. The integration of FOSROC (construction chemicals) and CSR (building products) contributed to double-digit growth in their respective regions.
However, the stock faces headwinds from a sluggish renovation market in Europe and a decrease in new construction volumes in North America, which fell 6.5% in Q3.
With the stock trading around €84, is the market underestimating the resilience of Saint-Gobain’s new business model?
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What the Model Says for SGO Stock
We evaluated Saint-Gobain’s potential through 2027, factoring in the cyclical recovery of construction markets and the margin benefits of its portfolio optimization.
Our model suggests a path to moderate upside. Using a forecast of 2.0% Revenue Growth (CAGR) and 11.0% Operating Margins, the model projects the stock could reach €99 by the end of 2027.
This implies an 8.3% annualized return over the next two years.
While not explosive, this return profile is attractive for defensive investors, especially given the company’s strong free cash flow generation and commitment to shareholder returns.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for SGO stock:
1. Revenue Growth: 2.0%
Growth will be driven by emerging markets and renovation.
While North America and Europe remain soft, Saint-Gobain is seeing “strong dynamic” in construction chemicals and emerging markets. In India, the company delivered another strong performance with double-digit volume growth.
The company also expects a “sequential improvement” in volumes in Europe, driven by a gradual recovery in the renovation market.
We forecast conservative annual revenue growth of 2.0% through 2027, assuming a stabilization in Western markets and continued expansion in the Global South.
2. Operating Margins: 11.0%
Saint-Gobain has structurally improved its margin profile. Operating income margin hit 11.1% in the LTM period, a record high.
The company is effectively managing the price-cost spread, maintaining positive margins even as inflation cools. Management noted that prices were up 0.7% in Q3, demonstrating pricing discipline.
We project operating margins to normalize slightly to 11.0%, which is still well above historical averages, reflecting the higher value-added mix of its products.
3. Exit P/E Multiple: 13.5x
Valuation is reasonable but not cheap.
Saint-Gobain currently trades at a P/E of around 13.5x, which is a re-rating from its historical discount.
Our model assumes an exit multiple of 13.5x by 2027.
We chose a multiple that aligns with the current valuation to ensure we have a built-in margin of safety. Given the company’s successful transformation and lower cyclicality compared to the past, a mid-teens multiple is justified, but we are not banking on further expansion to drive returns.
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What Happens If Things Go Better or Worse?
The risk-reward profile is skewed to the upside, particularly if the construction cycle turns faster than expected (these are estimates, not guaranteed returns):
- Low Case: If the global economy enters a recession and construction volumes contract further, returns could drop to 4.8% annual return.
- Mid Case: If the current “slow but steady” recovery continues, the model points to a solid 9.8% annual return.
- High Case: If renovation demand booms and emerging markets accelerate, returns could reach a compelling 14.0% annual return.
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How Much Upside Does Saint-Gobain Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
