Enersense Q3'25: Further support for our earnings growth expectations

Translation: Original published in Finnish on 11/3/2025 at 8:00 am EET.

Enersense's core businesses' operational earnings exceeded our estimates by a clear margin in Q3. The actual development further strengthened our confidence in the earnings turnaround we expect in the coming years. In light of the report exceeding our expectations and the at least moderately good outlook for demand, we slightly raised our forecasts for the coming years. We continue to view the share valuation as attractive, and therefore, we reiterate our Accumulate recommendation and raise our target price to EUR 5.2 (was EUR 4.7) in line with the forecast changes. 

Q3 result clearly exceeded estimates

The company's reported revenue declined sharply, reflecting the impact of the former non-core businesses in the comparison period. On the other hand, the development of revenue from core businesses (81.1 MEUR) was well in line with our forecast (80.2 MEUR). Enersense's adjusted EBITDA for its core businesses, in turn, amounted to 9.2 MEUR, well exceeding our 5.9 MEUR estimate. The estimate beat came from all business units, and the company noted that progress in executing the strategy supported profitability. We understand that the timing of some projects also contributed to the result. Additionally, we understand that the company had revised the adjustment items for the entire year in connection with the ERP project and also allocated early-year cost impacts to Q3 (cf. Q3: 1.6 MEUR and 1-9/2025: 1.8 MEUR). Despite this, operational development exceeded our forecasts by a clear margin. We commented on the result when it was first published here.

We raised our estimates for the coming years a bit

Enersense reiterated its guidance for the current year in connection with the report and estimates the adjusted EBITDA of its core businesses to be 16–20 MEUR (2024: 20.7 MEUR). Correspondingly, regarding the market situation, the company commented that it had seen an improvement in the Power market environment, while cautiousness continued in Energy Transition. In Connectivity, on the other hand, development had remained stable. The company also reported progress on its Value Uplift efficiency program, achieving an annual EBIT/EBITDA run rate improvement of 4 MEUR by the end of Q3. In addition, it still expects to reach the level of 5 MEUR by the end of the current year and the level of 6.5 MEUR by the end of H1’26. Given the good progress in implementing the program, we believe the company may still raise its estimate of the potential benefits of the program.

Based on the report, we slightly raised our growth estimates for the coming years (+3%) thanks to Power's strengthened order book and strong market conditions. This, together with our slightly raised margin projections, also raised our earnings estimates for the coming years (2026e-27e adj. EBIT +7-9 %). However, taking into account the unchanged guidance, we estimate that Q3 benefited from a slight tailwind in terms of timing, and reflecting this, we believe that the underlying profitability is still slightly lower than the actual development. Nevertheless, our forecast for adjusted EBITDA from core operations for the current year increased to 19.5 MEUR (was
17.9 MEUR).

Expected return is still attractive

Overall, the report reaffirmed our confidence in the sustainability of the turnaround in the core businesses in the coming years, supported by the Value Uplift program. Relative to this, we see upside in next year's EV-based multiples (2026e EV/ EBIT: 8x, EV/EBITDA 5x) compared to the levels we consider neutral for the company (EV/EBIT 8x-12x, EV/EBITDA 5x-7x). Due to our increased confidence, we consider the middle of these ranges to be acceptable. Our positive view on the share is also supported by the other methods we use (e.g., DCF ~EUR 5.6/share). In line with the overall picture, we remain on board with the turnaround story and continue to view the risk-adjusted expected return on the share as attractive despite its increased price.