Translation: Original published in Finnish on 11/2/2026 at 9:20 am EET.

Componenta published its Q3 business review on Friday, with profitability clearly above our expectations. Profitability did not change materially despite the shift in revenue mix, which reinforces our view of a broad-based operational improvement. Our 2027 adjusted EBIT forecast rises by 5%, in line with our revenue estimate, while other forecast changes are minor. The near-term demand outlook looks strong, and the conservative operating leverage in our model mitigates the risks to our earnings forecasts. We reiterate our EUR 7.80 target price and Accumulate recommendation.

Profitability held up despite the shift in revenue mix

Revenue grew 23% in Q3 to 30.5 MEUR, slightly above our forecast, driven by the defense and energy industries. Adjusted EBITDA rose to 2.5 MEUR (8.3% of revenue), clearly exceeding our 1.7 MEUR estimate, which we had lowered when the company narrowed its guidance. The revenue mix shifted markedly toward defense, which did not materially change the profitability profile. Operating cash flow was 2.8 MEUR, and the balance sheet is strong. The order book grew 38% to 25.1 MEUR, clearly exceeding our forecast. We commented on the results in more detail in our flash comment.

Growth outlook extends to 2028

Our revenue estimate is at the upper end of the guidance range, and our adjusted EBIT estimate above its midpoint. The guidance seems cautious relative to the order book and the first nine months, but the company attributed the guided level to costs related to the ramp-up of new products and investments, as well as uncertainty over the timing of year-end deliveries. In our view, the earnings growth outlook for 2027–2028 is at the core of the investment story. We raise our 2027 revenue estimate by 2% to 152 MEUR (+10% y/y), driven by growth in the defense industry, machine building, and energy. Our adjusted EBIT estimate rises by 5% to 10.6 MEUR. At the same time, based on customers’ Q3 reports and management comments, we lower our 2027 growth forecast for agricultural machinery, which pushes the rise in foundry utilization and the resulting profitability improvement back to 2028 in our estimates, when we expect tractor demand to start recovering. Following this year’s sharp jump in profitability, we model operating leverage moderately (adj. EBITDA margin 2027e: 11.0% vs. 2026e: 10.2%), as we expect it to be clearly more subdued than this year, despite organic growth of 10%. This limits the risk to our profitability forecast, although a negative revenue surprise would also weigh on profitability. We also slightly raise our dividend forecasts for 2027–2028 on the stronger balance sheet. Forecast risks relate in particular to the timing of the turnaround in the agricultural machinery market, the pace of data center investments, and the continuity of defense orders beyond 2028.

Earnings-based valuation is moderate

On next-12-month estimates, the adjusted P/E is ~10x and factoring-adjusted EV/EBIT ~8x, both at the lower end of our acceptable valuation ranges. Balance sheet and revenue-based multiples, by contrast, are high, and on LTM figures, the P/E is ~15x, so the share relies on the earnings growth we forecast. Following the forecast changes, our DCF value rises to EUR 7.8 (was EUR 7.5). We consider the risk/reward attractive, although the share price clearly assumes that the improved profitability will persist. The valuation therefore leaves no margin of safety for weaker profitability in the coming years.