Vestas delivers record figures and one bank stays sceptical anyway, what lies behind the argument over earnings quality

The Danish wind turbine maker beat every expectation in the second quarter of 2026, raised its margin guidance and started a share buyback. The stock jumped by a double digit percentage. One bank still did not change its recommendation.

The short version

• Vestas lifted second quarter 2026 revenue by 26 percent to 4.7 billion euros at an operating margin of 9.4 percent.
• Margin guidance for 2026 rose to seven to nine percent, alongside a share buyback of 400 million euros.
• Barclays raised its price target to 110 Danish kroner but stayed at underweight. Jefferies rates the stock a buy with a target of 215 kroner.

What Vestas reported

On 12 August 2026 Vestas published second quarter figures. Revenue rose 26 percent to 4.7 billion euros and the operating margin reached 9.4 percent.

On that basis the company raised its full year 2026 margin range to seven to nine percent and started a share buyback of 400 million euros. The market reacted clearly, the stock gained by a double digit percentage and competitors such as Nordex benefited too. On 14 August the share traded at 28.02 euros, up 20.88 percent since the start of the year.

In a buyback a company buys its own shares in the market and usually cancels them. Profit is then spread over fewer shares. Buybacks signal spare cash but are not proof of operating strength.

The dissenting voice

Barclays raised its Vestas price target on 13 August from 80 to 110 Danish kroner but left the rating at underweight.

The analyst Vlad Sergievskii attributes the second quarter upside to a solid onshore business and to favourable accounting effects. He still regards earnings quality as weak and says free cash flow stayed moderate. His conclusion is that this quarter's performance will be hard to repeat.

Earnings quality describes where a reported profit comes from. It can come from products sold and paid for, or from revaluations, released provisions and the timing of income recognition. The second route is accounting correct but does not necessarily repeat. Free cash flow is the money left after operating costs and investment. If it lags the reported profit, that points to weak earnings quality.

The view is not new. In early May the analyst pointed to cash burn up 60 percent year on year, to a fall in average selling prices despite a better product mix and to weaker deliveries in the American onshore business.

Why the views are so far apart

On the same day Barclays stayed at 110 kroner and underweight, Jefferies kept a buy rating with a target of 215 kroner. Other banks raised their targets too.

Such a spread is unusual for an established large company. It shows that the valuation depends less on the current result than on assumptions about the coming years.

Wind turbines are delivered under multi year contracts, often with service agreements running two decades. How a maker books those contracts over their life, when it recognises costs and how it prices risk shapes the reported quarterly result considerably. Two analysts can look at the same numbers and reach different conclusions.

The structural problem of the industry

Turbine makers spent years winning orders in an environment of low interest rates, stable material costs and functioning supply chains. All three conditions have changed. The result is contracts with fixed prices and variable costs. Where costs rose more than assumed, losses run across the whole contract term.

Interest rates matter especially for wind power. A wind farm incurs nearly all its cost at the start and earns its income over decades. A rise of two percentage points changes project returns more than an equivalent move in the power price. That is why many projects were postponed even though political build out targets stayed the same.

There is also a split between the divisions. Onshore machines are technically mature, with thin but predictable margins. Offshore machines are more demanding, the projects larger and the risks harder to price. The upside came from onshore while the scepticism points at offshore.

On top comes competition. Chinese manufacturers have won substantial market share outside Europe and offer prices that European suppliers struggle to match.

Frequently asked questions

What did Vestas report for the second quarter of 2026

Revenue rose 26 percent to 4.7 billion euros and the operating margin came in at 9.4 percent. Vestas raised its full year 2026 margin guidance to seven to nine percent and started a share buyback of 400 million euros. The stock then gained by a double digit percentage.

What does earnings quality mean

Earnings quality describes where a reported profit comes from. If it comes from products sold and paid for, it counts as high quality. If it comes from revaluations, released provisions or the timing of income recognition, it does not necessarily repeat, even when the accounting is correct.

Why does Barclays stay sceptical despite the strong numbers

Analyst Vlad Sergievskii traces the upside to the onshore business and to favourable accounting effects. Free cash flow stayed moderate and earnings quality weak in his view. Barclays therefore only lifted its price target to 110 Danish kroner and kept the underweight rating.

Why are bank price targets so far apart

Barclays names 110 Danish kroner and Jefferies 215 kroner. Turbines are sold under multi year contracts with service agreements running up to two decades. The valuation therefore rests less on the current quarter than on assumptions about prices, costs and risks over many years.

This analysis is for information only and is not investment advice.